Stournaras Says No Haircut For Greece

Greek Finance Minister Yiannis Stournaras
Greek Finance Minister Yiannis Stournaras

Greek Finance Minister Yannis Stournaras, who has been relentlessly upbeat about what he believes will be a more rapid recovery for the Greek economy than do most analysts, said he envisions the country even being able to borrow from the markets again at the end of 2014 when its $325 billion double-barred bailouts from international lenders runs out.

In an interview with the German financial newspaper Handelsblatt he also said Greece will not have to impose losses on the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) as it did in 2011 to private investors and those in the Diaspora, who took a 74 percent hit.

Stournaras said he’s confident a so-called “haircut” can be avoided if the lenders allow a relaxing of the terms. The Greek government for months had been floating a trial balloon trying to gauge whether a haircut would float but it’s been shot down by Germany, the biggest contributor to the bailouts and as German Chancellor Angela Merkel wants to downplay the risk of Greece before the Sept. 22 federal election in her country.

Stournaras said Greece could re-enter the markets as soon as the second half of 2014, assuming there is a positive growth in the economy, a primary surplus in the first half of 2014, better-than-expected tax revenue growth, no social unrest, a faster pace of privatization, implementation of more reforms and possible restructuring of its loans.

He said, “That would be a great success which would allow us to test the market with a new bond issue in the second half of 2014 (…) initially with a small amount.” He said that could be in the range of 3-5 billion euros or even less although he didn’t say why investors who had been burned only two years ago would be willing to take a chance on Greece again.

Prime Minister Antonis Samaras, who while during a trip to the U.S. this month urged investments from Greek-Americans has also reneged on a promise to hold Diaspora bondholders harmless for their losses under the so-called Private Sector Involvement (PSI) act that was imposed in 2011 by then finance minister Evangelos Venizelos, the current PASOK Socialist leader who is the Deputy Prime Minister/Foreign Minister in the coalition government led by the New Democracy leader. The Diaspora bondholders are planning to sue Greece to get their money back.

Many analysts, however, differ with Stournaras’ optimism even as new statistics show that Greek debt has under Samaras’ leadership to 321 billion euros ($429.26) and there is still a prevalent belief Greece will have to write off a big chunk of its debt and could remain a debt colony for generations.


  1. Stournaras is right. There will be no debt haircut.

    As for the last sentence you are mixing apples and oranges. The “nominal” debt is not the issue. The “real” debt is.

    Say you have 350 Bil. euro debt for which if you had access to market you had to pay more than 4% in interest.

    Say now that right now you can service this debt at below 2% (which is what Greece already has).

    And further assume that you get a 50 year repayment extension and an interest rate below 1%. In 50 years inflation alone would make the debt 30% or less of what it is today (nominal vs. real).

    Stop looking a gift horse in the mouth and understand the big pictures rather than populist politics.