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ECB calls for 'clarity' for Greece at June meeting

Wednesday, May 31, 2017 - 18:31

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Greece's creditors should create "clarity" by reaching a deal on debt relief for Athens at a meeting next month, European Central Bank board member Benoit Coeure (above) urged Wednesday.

[FRANKFURT] Greece's creditors should create "clarity" by reaching a deal on debt relief for Athens at a meeting next month, European Central Bank board member Benoit Coeure urged Wednesday.

"It is very important that an agreement is reached at the Eurogroup meeting on 15 June," Mr Coeure told a Frankfurt conference.

Any relief measures for Greece's huge mountain of debt - which currently amounts to a towering 179 per cent of annual output - would not come into force before mid-2018.

Nevertheless, "being sufficiently clear on the measures today would help frontload many of the benefits, in particular the rebuilding of confidence" at home and abroad, the ECB board member said.

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"Clarity about debt measures is also a necessary condition for Greece's bonds to be potentially eligible" for purchase under the ECB's mass bond-buying programme, Coeure added.

The Eurogroup, made up of eurozone finance ministers, failed to come up with an agreement at a recent meeting on May 22.

Disagreements between the International Monetary Fund (IMF) and European creditors led by Germany on Greek fiscal targets have held up a final accord.

Germany has an election in September and the German public is hostile to more financial support for Athens.

The German government has promised lawmakers that it will not offer further aid to Greece without the IMF's blessing.

But the IMF believes European forecasts for Greece's growth and government budget surpluses are too optimistic, and says it will not participate in the programme unless there are more details on debt relief - which Berlin is reluctant to give.

Greek Finance Minister Euclid Tsakalotos used an appearance at the same conference Wednesday to criticise the IMF, arguing the Washington-based lender is too gloomy about his country's growth prospects.

Just a day earlier, German Finance Minister Wolfgang Schaeuble had said that if the IMF's pessimistic forecasts were correct, "then all the programmes (for Greece) have been pointless."

The wrangling has held up the next tranche of aid from Europe from the third, 86 billion euro (S$133.0 billion) aid deal Greece and its creditors secured in July 2015.

Greece needs the funds to repay seven billion euros in maturing debt in July.

AFP

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