The controversial issue of Greek debt relief is being considered in Germany, as it becomes increasingly obvious that the debt is currently unsustainable, ahead of the critical vote in German parliament on Wednesday on the new bailout program for Greece.
According to the German State Secretary in the Ministry of Finances Jens Spahn, there is the common belief that the Greek debt requires relief, but not an outright write off. Mr. Spahn, who spoke to the Welt am Sonntag newspaper added that such a write off is legally not allowed.
The German officer further explained that by extending maturities for decades and significantly slashing interest rates the effect would be the same for Greece and that European taxpayers would suffer fewer losses, as they would not become apparent immediately, but rather in the future. Mr. Spahn also conceded that if Berlins wants the IMF to participate in the new Greek bailout program, then it must be prepared for debt relief.
Similarly, the SDP’s representative at the German parliament’s budget committee Johannes Kahrs underlined the necessity of facilitating the Greek government in paying of its debt and noted that talks with the IMF over the next few months would determine how the debt relief will be carried out.
The chairman of the Alliance ‘90/The Greens’ Parliamentary Group Anton Hofreiter also supported debt relief for Greece, in order for the bailout to be effective and to attract investments in the future. Mr. Hofreiter commented that the debt must be addressed in such a way so that primary surpluses may be invested in financial growth.
