European Stability Mechanism (ESM) CEO Klaus Regling said that he excludes a write-off of the Greek debts, however, it is possible to smooth debt conditions.
Creditors agreed to lower interest rates and extend the period of repayments.
Despite objections of Prime Minister Alexis Tsipras, Klaus Regling noted that the IMF will participate in Greece’s bailout with a small contribution.
Alexis Tsipras believes that the ESM offers better conditions than the IMF: longer period of payments and lower interest rates. Thus, a debt can be sustainable regardless of its sum.
Besides, the ESM chief supposes that the Greek government has already understood that their debt will not be wiped off. The ESM is planning to extend the period of the already very low payments to attract investors both in the financial sector and real economy, which has more long-term prospects.
Moreover, Regling thinks that some partial refinancing from the markets by the end of 2016 can take place.
The monetary union was designed in a way that no exit of any country was anticipated. Therefore, there is no framework for Grexit.
According to the third memorandum for stability support, the ESM became one of the Greek international creditors. The largest contribution will come from the ESM.
Greece’s Ministry of Finance reported that at the end of September, the country’s debt totaled 314.552 billion euros. By the end of the year, it will grow to 316.503 billion euros. That means that Greek debt/GDP ratio will reach 180.2%.
