Greece economy: Merkel rules out more debt relief

  • 31 January 2015
  • From the section Europe
Angela Merkel, 29 Jan Image copyright AFP
Image caption Angela Merkel insists she still wants Greece to stay in the eurozone

German Chancellor Angela Merkel has ruled out cancelling any of Greece's debt, saying banks and creditors have already made substantial cuts.

But Mrs Merkel told the Die Welt newspaper she still wanted Greece to stay in the eurozone.

Greece's left-wing Syriza party won last weekend's election with a pledge to have half the debt written off.

Its new finance minister has refused to work with the "troika" of global institutions overseeing Greek debt.

The troika - the European Commission, European Central Bank and International Monetary Fund - had agreed a €240bn (£179bn; $270bn) bailout with the previous Greek government.

But Finance Minister Yanis Varoufakis has already begun to roll back the austerity measures the creditors had demanded as part of the deal.

Meanwhile, EU economic and financial affairs commissioner Pierre Moscovici told the BBC's Hardtalk that Greece had to honour its previous commitments, although he said he wanted Greece to remain in the eurozone.


Mrs Merkel told the Hamburger Abendblatt: "I do not envisage fresh debt cancellation."

She said: "There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debt."

Greece still has a debt of €315bn - about 175% of gross domestic product - despite some creditors writing down debts in a renegotiation in 2012.

Greek economy in numbers

  • Average wage is €600 (£450: $690) a month
  • Unemployment is at 25%, with youth unemployment almost 50%
  • Economy has shrunk by 25% since the start of the eurozone crisis
  • Country's debt is 175% of GDP
  • Borrowed €240bn (£188bn) from the EU, the ECB and the IMF

Mrs Merkel insisted she did not want Greece to leave the eurozone.

She said: "The aim of our policy was and is that Greece remains permanently part of the euro community. Europe will continue to show its solidarity with Greece, as with other countries hard hit by the crisis, if these countries carry out reforms and cost-saving measures."

On Friday, German Finance Minister Wolfgang Schaeuble warned Greece about its negotiation tactics on writing off debt.

"There's no arguing with us about this, and what's more we are difficult to blackmail," he said.

Finance Minister Varoufakis on Friday refused to work with the troika, saying he would instead talk to individual organisations and EU member states.

Media captionGreek Finance Minister Yanis Varoufakis: "We are not prepared to carry on pretending and trying to enforce an unenforceable programme"

He has brought forward to Saturday his planned trip to Paris, where he will meet French counterpart Michel Sapin.

"We are not prepared to carry on pretending and extending, trying to enforce an unenforceable programme which for five years now has steadfastly refused to produce any tangible benefits," Mr Varoufakis told the BBC's Newsnight.

"The disease that we're facing in Greece at the moment is that a problem of insolvency for five years has been dealt with as a problem of liquidity."

Greece's current programme of loans ends on 28 February. A final bailout tranche of €7.2bn still has to be negotiated.

New Greek PM Alexis Tsipras will visit Cyprus, Italy and France next week but has no plans to visit Germany as yet.

Mr Moscovici meanwhile told the BBC the Greek government had to respect previous commitments.

Media captionPierre Moscovici: Greece's place is in the eurozone

But he added: "We believe that the place of Greece is in the eurozone, the euro needs Greece and that Greece needs and wants to be in the eurozone.

"We feel that it's very important for the stability of the eurozone and for the credibility of the euro that there is no 'Grexit'. This is why we will do everything that is needed to avoid it."

The full interview with Mr Moscovici can be seen on BBC World News on Monday 2 February at 0430, 0930, 1630 and 2130 GMT.