European Union ministers sceptical over Greece debt deal
16/02/2015
Several finance ministers from the Eurozone are set to meet in Brussels later today, despite growing scepticism that a deal can be made to restructure Greece’s debt.
The Greek economy has been bailed out twice by the European Union in recent years. The first of these bailouts was in 2010 when a loan of €110 million was provided.
However, in 2012 another economic downturn meant that Greece needed to loan a further €130 million, therefore taking the total debt to €240 million.
As part of the initial bailout, Greece agreed to implement measures of austerity and the privatisation of government assets to ensure that the loans could be repaid. However, the quality of life in Greece has been hit hard by these measures of austerity and unemployment has spiralled out of control.
This has led to an anti-austerity government winning a snap election in January, which now wants to restructure the countries debt with the European Union.
However, both the International Monetary Fund (IMF) and the European Union (EU) have both reiterated that the current debt repayment schedule should stay the same.
Wolfgang Schaeuble, the German finance minister said that the chances of a deal being made were slim.
Mr Shaeuble also said: “The problem is that Greece has lived beyond its means for a long time and that nobody wants to give Greece money any more without guarantees."
‘Completely different country’
Despite repeated suggestions of scepticism that a deal could be made, Greek prime minister Alexis Tsipras conceded that he expected any negotiations to be difficult. However, he also insisted that he is “full of confidence” that a deal will be made.
Mr Tsipras went on to say “I promise you: Greece will then, in six months' time, be a completely different country."
The new Greek government have suggested a plan that would be implemented in two parts. Firstly, a ‘bridging loan’ would be given to Greece to help it repay €7bn of maturing bonds and keep the country running for six months.
The country’s debt would also be refinanced through “GDP bonds”, which would carry an interest rate that is linked to the countries rate of economic growth.
Additionally, Greece want their ‘primary surplus target’ reduced, so that the government only has to produce a surplus of 1.49% instead of the current 3% target.
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