German Finance Minister Wolfgang Schaeuble said he’s less optimistic than his French counterpart, Michel Sapin, about the role reprofiling can play in restoring the sustainability of Greece’s debt.
Speaking in Frankfurt at a conference organized by the Bundesbank, Germany’s central bank, Schaeuble said debt forgiveness among euro-region countries is banned by the European Union’s treaties. The reprofiling of Greece’s debt in 2012 went beyond what the International Monetary Fund was willing to accept then, he said.
“That’s why the leeway for the reprofiling or restructuring of debt is very small,” Schaeuble said Thursday. “We will discuss in coming hours and days whether there’s anything left here to solve the problem, but I’m more skeptical than Michel Sapin.”
The Greek government has until Thursday midnight to present an economic plan that includes spending cuts, in exchange for a new bailout. Failure to deliver a credible proposal will set off a process for the country’s exit from the single currency as early as Sunday, its European partners have warned.
The European Commission and the the IMF will assess the sustainability of Greece’s current debt levels, a commission spokesman, Margaritis Schinas, said in Brussels Thursday.
Agreement on debt sustainability is one of the components for any deal with Greece “under the understanding that that would come” later, “in October, provided that the other conditions would have been met,” Schinas said, citing earlier comments by the commission’s president, Jean-Claude Juncker.
IMF Chief Economist Olivier Blanchard said in Washington on Thursday that “there has to be movement on the fiscal and structural side, and on the other side there has to be a clear financing plan -- so more financing and debt relief.”