ECB Asmussen: See No Appetite For Greek Debt Restructuring
There is little appetite among Eurozone countries for a second Greek debt restructuring, but official creditors are looking at a menu of other options to keep the country afloat, European Central Bank Executive board member Joerg Asmussen said over the weekend.
"My impression is that the appetite for a second restructuring is extremely low among member states," Asmussen told Dutch newspaper De Tijd. "We have to look at a menu of options, including voluntary debt buybacks, lowering the interest rate on outstanding loans and asking for a higher Greek primary surplus," Asmussen said.
The German Executive Board member would not speculate about a two year extension of the Greek fiscal adjustment program, since officials lenders are completing their review of Greece program, but he suggested that it might be useful.
"Such a delay could be part of a comprehensive package. However, this is only possible if the 16 other euro area countries and the IMF agree to provide additional financing," Asmussen said.
Greece's debt ratio is likely to be above 140% of GDP by 2020, missing the official target of 120%, according to ECB estimates, he said. Still, offering additional aid to Greece" will be significantly cheaper than an exit [from the Eurozone] or a default," he added.
"It is preferable that Greece remains in the euro area," Asmussen asserted, though he dashed any hopes that the ECB would contribute in easing Greece's debt burden. "The ECB cannot provide extra financing, because this would be monetary financing," he argued.
Nevertheless, Asmussen reiterated the ECB's pledge not to assume senior creditor status for any bonds it might eventually buy under the OMT purchase program.
"Let me make clear that currently I don't see a case for a second debt restructuring in the euro area," he said. "If there were to be a second restructuring, the treatment of the ECB would be the same as for other bond holders."
Asmussen described the OMT bond buying programme as a "monetary policy instrument to eliminate the tail risk of a breakup of the euro area," and he said it should serve as a "credible back stop."
Asmussen would not confirm that deflation risks are becoming larger than inflation risks. "We have moderate growth, subdued monetary expansion and the underlying price pressure should remain moderate. Price developments should remain in line with price stability over the medium term," he said.