Greece 'may renegotiate rescue loans'

Wolfgang Schaeuble (left) and Yannis Stournaras Wolfgang Schaeuble (left) was the first to break the silence, and now Yannis Stournaras is adding his voice

Greece may seek to ease its debt burden by renegotiating its bailout terms, the Greek finance minister said on Monday.

Yannis Stournaras told German newspaper Handelsblatt this could involve lower interest payments and more time to repay 240bn euros (£206bn) in loans.

It comes a day after he conceded that Greece may face a hole in its finances of up to 10bn euros.

Speculation over Athens' borrowing needs comes at a sensitive time, with German elections due in September.

Earlier this month German Finance Minister Wolfgang Schaeuble said for the first time that Greece will need another bailout to plug a forthcoming funding gap.

The Greek bailout remains a sensitive topic in Germany. Chancellor Angela Merkel is seeking re-election on 22 September, and many German voters feel they have already contributed enough to European bailouts.

High hopes

Mr Stournaras told German business daily Handelsblatt on Monday that it may not be necessary for Greece to seek a third bailout package from European partners and the International Monetary Fund (IMF) after all.

This was despite having himself alluded to the possibility of a 10bn-euro package in an interview on Sunday with the Greek newspaper Proto Thema, and insisting that it should not come with any more austerity conditions attached.

The IMF last month estimated Greece would need around 11bn euros in 2014/15.

Instead, Mr Stournaras expressed optimism that the government could manage within the terms of its existing bailouts.

CDU election poster showing Angela Merkel Angela Merkel is running for election again in September

The finance minister claimed his government may even be able to borrow money from the financial markets by the second half of 2014, obviating the need for any further rescue loans.

He said this would be possible if his country's economy grew next year - after six years of contraction - and if the government managed to achieve a primary surplus on its finances, meaning that it only needed to borrow money in order to meet interest payments on its existing debts.

"That would be a great success which would allow us to test the market with a new bond issue in the second half of 2014," Mr Stournaras said.

He also criticised his own countrymen's habit of avoiding taxes - an issue often highlighted in the German tabloid press - admitting that many treated it as "a kind of national sport".

He said that more than 600 tax avoiders had already been sent to prison under current Greek laws.

'Domino effect'

The minister ruled out the possibility of another "haircut" on the country's private sector debts, saying it would be better to alleviate the terms of the country's rescue loans instead.

Last year, as a condition to the country's second bailout package, the Greek government had to negotiate a formal reduction in the amount owed to private sector lenders.

German Chancellor Angela Merkel has also warned about writing down any more Greek debt.

Chancellor Merkel said a haircut of Greek debt would be bad for the stability of the eurozone, which has seen a return in investor confidence after years of worrying about the future of the single currency and bailouts of several nations - most recently, Cyprus.

"I am expressly warning against a haircut," Mrs Merkel said. "It could trigger a domino effect of uncertainty with the result that the readiness of private investors to invest in the eurozone again falls to nothing."

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