Greece needs reforms, not debt relief: Germany's Schaeuble

EghtesadOnline: Structural reforms rather than debt relief will help Greece to achieve sustainable growth and stay in the euro zone because rates and repayment are putting hardly any burden on its budget, Germany's finance minister was quoted as saying on Sunday.

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04 December 2016

According to Reuters, euro zone finance ministers will meet in Brussels on Monday to discuss short-term measures to lighten Greece's debt burden and to assess Athens' progress in reforms required within its third bailout program.

Asked in an interview by Bild am Sonntag newspaper whether it might be time to tell German voters that a debt cut for Greece was inevitable, Finance Minister Wolfgang Schaeuble said: "That would not help Greece."

"Athens must finally implement the needed reforms. If Greece wants to stay in the euro, there is no way around it - in fact completely regardless of the debt level," Schaeuble said.

Schaeuble, a senior member of Chancellor Angela Merkel's conservatives, said the Greek budget was hardly burdened by interest rates and debt repayment because its euro zone partners had already relieved Athens from such duties for a long time.

Germany is heading into an election year in 2017 and Merkel's conservatives are getting ready to campaign in an increasingly fractured political landscape, in which the far-right Alternative for Germany (AfD) is likely to enter the national parliament for the first time.

The AfD is benefitting from a popular backlash over Merkel's decision last year to open Germany's borders to more than one million migrants, many of them Muslims fleeing from war zones in the Middle East, Asia and Africa.

The anti-immigrant AfD is also strictly against the euro zone's current policy of bailing out struggling member states under the condition of structural reforms.

Greece's official creditors - the European Stability Mechanism (ESM), the ECB and the IMF - are assessing Athens' delivery on reforms and fiscal targets set in its bailout program of up to 86 billion euros ($92 billion) agreed last summer, the third aid package for Greece since 2010.

Greece hopes to swiftly conclude the review and secure short-term debt relief so that its bonds are included in the ECB's bond buying scheme and it can return to capital markets before 2018, when its current bailout expires.

The main sticking point in talks with lenders are unpopular labor reforms, including collective bargaining, a mechanism to set the minimum wage and giving companies more freedom to lay off workers.

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