Germany Says No Greek Haircut

The German Finance Ministry, rejecting a report in the news magazine Der Spiegel that said Germany was readying a third bailout package for Greece, reiterated that there is no chance of debt relief and that Greece will have to pay back the $325 billion in two bailouts it received from international lenders.
“There is no new situation regarding Greece,” said spokesman Marco Semmelmann. Asked about the possibility of a debt write-down, he said: “I can deny that categorically.”
If Greece is allowed debt relief, the cost would have to be passed on to taxpayers in the other 17 Eurozone countries who would have to pass for generations of wild overspending by Greek politicians.
Weekly Der Spiegel reported that Berlin was preparing the ground for a third aid package for Greece of 10-20 billion euros which could include a further haircut affecting public creditors or a “limited additional program” involving fresh funds from the European rescue fund.
The magazine said it had seen a five-page ministry position paper outlining the details of the Greek aid, including allowing Greece not to repay all it owes to the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.) The IMF also previously rejected the idea of taking losses but said that the ECB and EU lenders should.
In 2011, a previous Greek government stiffed private investors, including those in the Diaspora and Greek and Cypriot banks and other bondholders, with 74 percent losses but still hasn’t made a dent in a staggering $430 billion debt.
German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble have repeatedly ruled out a haircut as well. There was no report on whether a third bailout is being set.
The position paper reportedly said if Greece gets more money it would have to speed delayed reforms and it could force Prime Minister Antonis Samaras to go back on his word not to impose more austerity measures.
The timing is also critical as Samaras’ coalition of his New Democracy Conservatives and his partner the PASOK Socialists face a tough in the European Parliament and Greek municipal elections from the major opposition Coalition of the Radical Left (SYRIZA).
The Leftists oppose the bailout deals with the Troika. SYRIZA leader Alexis Tsipras, who said he would revise or renege on the deal, said Greece’s ruling parties will be repudiated in the elections and he will come to power.
A spokesman for the finance ministry denied that a new debt write-down was planned for Greece. “There is no new situation,” referring to Schaeuble’s previous hard line against the idea.
He also has said that there could be a remaining need for some refinancing but any further package would be far smaller than the aid granted so far but Samaras and Greek Finance Minister Yannis Stournaras said Greece doesn’t need more aid because it will have a one billion euro ($1.37 billion) primary surplus.
The bailouts run out this year but envoys from the Troika still haven’t completed negotiations on delayed reforms and how Greece will close a hole of as much as 2.4 billion euros ($3.23 billion) in the 2014 budget.
A senior EU official said last month that Greece was not in urgent need of funds now and extra money would only be needed when Greece must pay back debt, including an 11 billion euro ($14.83 billion) bond, also in May.