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Wednesday, December 6, 2023

Greece needs debt relief, Eurozone central banker says

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Greece’s bailout lenders have been urged to grant the country relief on its massive debts if Athens agrees to impose tougher budget austerity measures.

European Central Bank executive Benoit Coeure said the ECB was “looking forward to a solution” on Greek debt. Most of Greece’s debt is now made up of bailout loans from other eurozone states and the International Monetary Fund.

“All stake holders in the Greek adjustment programme realise that there are serious concerns about the sustainability of the Greek public debt,” he told a business conference in Athens ahead of a meeting with Prime Minister Alexis Tsipras.

He said that the eurozone countries are discussing a range of possible measures to make Greece’s debt manageable.

Mr Coeure was joined in Athens by EU Finance Commissioner Pierre Moscovici in an effort to try and overcome the remaining obstacles in the negotiations on austerity measures.

Bailout lenders want Greece to allow more flexible working contracts and drastically scale back protection for troubled mortgages – with nearly half of Greek bank loans now considered to be non-performing.

But the government fears the measures would deepen the domestic welfare crisis. Years of recession have shrunk the economy by a quarter and roughly doubled the rate of poverty.

“Allow me to make some criticism of the European institutions,” Finance Minister Euclid Tsakalotos told the Athens conference, while speaking of labour regulation.

“Those institutions should not consider a country that is in a (bailout) programme to have lesser rights. I think it’s not right, not morally right.”

Greece’s debt level is set to peak this year at 180.3% of gross domestic product. Currently at 23%, unemployment is slowly declining, due in large part to an increase in low-paid part-time jobs.

A study released last month by Greece’s largest labour union said 72% of unemployed Greeks have been out of work for more than a year, while the number of households suffering “serious material deprivation” has increased from 11.2% before the crisis to 22.2% in 2015.

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