Greece hoping for Germany to change tune on debt relief

Athens (AFP) – Greece is hoping for a change of tune by Germany on debt relief when their finance ministers hold Friday their first meeting since a new government took office in Berlin.

Greek Finance Minister Euclid Tsakalotos travels to Berlin where he will meet his new German counterpart Olaf Scholz, a meeting that could give clues on just how much debt relief Berlin is ready to accord Greece as Athens makes preparations to exit its bailout programme in August.

Scholz’s predecessor Wolfgang Schaeuble was the main proponent of requiring Greece to pursue painful austerity policies in order to win bailout loans, and strenuously resisted any talk of debt relief.

While staving off Greece from crashing out of the eurozone, the bailout loans have resulted in the country’s debt remaining at an unsustainable 180 percent of its annual economic output.

But as Greece approaches the end of its bailout programme, markets will need to be convinced that it can handle its debt load or it may find itself seeking help once again.

In January, new Eurogroup chair Mario Centeno said finance ministers would start “technical work” on “debt relief measures” for Athens.

German business daily Handelsblatt last week reported that the European Stability Mechanism is favourable to extending Greece’s loans by seven years and deferring 13 billion euros in interest payments for five years.

It also noted a French proposal that goes even further, calling for extending Greek loans by 12 years and capping interest at two percent, thereby reducing repayment by 18 billion euros.

Tsakalotos has pledged to present this month a reform-based growth plan.