Some EU Rescue Loans May Not Be Paid Back, Bailout Chief Says

Klaus Regling, the head of Europe’s rescue funds, said some of the loans extended to troubled euro- region countries may not be paid back and noted creditors are taking on risks in the case of Greece.

Perceptions in Germany and other euro countries that taxpayer money is given away freely to aid recipients and that the European Central Bank will tolerate surging inflation in the aftermath of the crisis are wrong, he said.

“These are loans that are paid back, at least predominantly,” Regling said at a panel discussion in Hamburg today. “Risks are being taken, also in the case of Greece there are risks.”

While the European Stability Mechanism is set up like the International Monetary Fund, which always got its money back in the past, there are examples of IMF program countries struggling to repay their loans, Regling later told Bloomberg News. Greece is a “special case,” Regling said, without elaborating.

To contact the reporter on this story: Rainer Buergin in Hamburg at rbuergin1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net