WSJ: Debt relief for Greece but under conditions

“Haircut” in return for new reforms

In a publication of the WSJ which invokes officials involved in the negotiations, it is stated that debt relief in exchange for new reforms is under consideration by the international creditors of Greece.

The contribution to the eurozone rescue program officially ends later this year, while that of the IMF will continue until March of 2016.

To date, creditors are pressuring the Greek government, usually for additional measures while delaying the doses.

According to WSJ, Greece hopes to break free from the international aid and the Greek Prime Minister Mr. Antonis Samaras insists that he will not need a third program of subsistence, so the influence of creditors on economic reforms has languished.

That’s why European creditors are seeking  ways to ensure that all the movements aiming at debt relief (especially the extension of the repayment schedule,) will be conducted under the condition that Greece meets specific strategic objectives.

Despite the requirement of the IMF for eurozone countries to “mow” part of the Greek debt, the European side merely wants  to make adjustments to the terms of repayment. Through such adjustments, the long term debt will be reduced and facilitations concerning repayment will be rendered feasible. As stated by the IMF, no changes will be made in any conditions regarding the repayment of its own funds, as they have no legal right to do so.

Another piece of the puzzle is the Greek bank recapitalization fund, known as the EFSF. The Fund was funded with 50 billion euro baislout to recapitalize the banks, of which 11 billion have not been used yet.