ESM Chief Klaus Regling Says Debt Relief Not Necessary for Greece



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European Stability Mechanism (ESM) Chief Klaus Regling told reporters on Wednesday evening that Greece will have no problem concerning its debt for the next decade. “In the short-term, there’s no problem,” he said, aligning his views to those of the German government that believes that debt relief is not necessary for Greece despite the pledge that it would be given if Greece soldiered on with painful reforms.

Now, that crushing reforms have been passed at the expense of a shrinking GDP and national debt explosion to around 180 percent of the GDP since the start of the economic crisis, Regling said that relief is unnecessary. Regling pointed out that issues of debt restructuring are “not relevant if you’re paying 1 percent interest,” and he said that Greece was paying less for its debt than other countries due to the cheap loans of the ESM. “That’s an enormous advantage,” he said. “That is the solidarity of the eurozone for Greece. It’s already there, it repeats every year.”

“I am rather on the side of (German Finance Minister Wolfgant) Schaeuble than (IMF Chief Christine) Lagarde,” said Regling.

The International Monetary Fund’s (IMF) economists disagree and are at odds with Germany regarding Greece’s economic recovery without a debt haircut. The dispute has led to the IMF’s refusal to participate in the latest 86-billion-euro bailout for Greece on the grounds that it does not consider the Greek debt sustainable.