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Germany rules out Greek debt writedown

 
 
 
 
 
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German Finance Ministry spokesman Martin Jaeger.

Germany has ruled out any restructuring of Greece’s debt to international creditors, despite a report by the International Monetary Fund (IMF) which shows the cash-strapped country is in dire need of debt cancellation.

An analysis by the IMF, which was released in Washington on Thursday, showed that Greece needed an extra EUR 50 billion (USD 56 billion) in funds through to the end of 2018 as well as a massive debt write-down.

Speaking on Friday, however, German Finance Ministry spokesman Martin Jaeger said the IMF report “by no means leads to the conclusion that a cut in debt was absolutely necessary.”

The analysis said the country needed the funds and debt write-off notwithstanding the results of a Greek referendum scheduled to take place on Sunday on whether the government should agree to the lenders’ demands in return for bailout funds.

Greece received two bailout packages in 2010 and 2012 worth a total of EUR 240 billion (USD 272 billion) from its creditors following its 2009 economic crisis in return for implementing harsh austerity measures.

The country is seeking a third bailout in the hope of resolving its deepening financial crisis.

The Greek parliament passed a bill on June 27, approving a motion forwarded by Prime Minister Alexis Tsipras to hold the referendum and the government has been rallying the public to vote “No.”

However, Germany, France, Italy and European Commission President Jean-Claude Juncker have all said a ‘No’ vote would negatively impact Greece’s place in the eurozone, and maybe even in the European Union.

Jaeger also said the situation in Greece had been made much worse by the Athens government’s “mismanagement” since it was elected in January.

On June 24, Tsipras took to the Twitter hitting out at his country’s creditors for not accepting his government’s latest reform proposals and suggesting that Germany was trying to push Greece out of the euro.

Tsipras wrote, “The repeated rejection of equivalent measures by certain institutions never occurred before – neither in Ireland nor Portugal. This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed.”

The Greek premier complained that his country was being put through the wringer, saying that other countries in a similar situation had not faced similar crippling measures.

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