The Managing Director of the European Stability Mechanism (CEP), Klaus Regling said today in Tokyo that it has already begun technical work to determine whether a reduction in the Greek sovereign debt will be required after the bailout programme for the Greek economy is completed later this year.

However, Regling noted that the private sector would not be required to accept a haircut, ie a write-down of the nominal value of Greek sovereign debt.

“The technical work has begun so that we are ready until summer when the programme is over”, Regling told reporters a few hours after he delivered a speech at an event in the Japanese capital.
He stressed that If further debt relief was required in order to sustain its sustainability, the creditors would be ready to intervene in that direction “under the condition that Greece will continue to implement reforms”.
The ESM chief also expressed optimism about Greece’s progress, pointing out that the country was able to go to the markets and sell bonds before it even exited the programme. Meanwhile, in a recent interview, Regling said about Greece: “Competitiveness has returned, and exports are having a good effect on the current account balance. The aim is now to strengthen the potential growth rate of Greece.”
But whether Greece can maintain its economic and fiscal soundness on its own is unclear, and Regling did not rule out the possibility of further Greek debt relief.
“If the euro area finance ministers come to the conclusion that Greek debt sustainability requires additional debt relief, the euro area is prepared to do that,” he said. “That assessment will be made in the next few months.”