Euro states to dicuss details of Greek debt relief, Austria's Schelling says

However, there will be no nominal debt haircut for Greece, the Austrian finance minister tells Stuttgarter Zeitung

Schelling: We can offer a longer redemption period

The euro states will discuss with Greece in the coming weeks the details of debt relief for the highly indebted country, Austria’s Finance Minister Hans Joerg Schelling told Stuttgarter Zeitung. However, “there will be no nominal haircut,” Schelling stressed in the interview. “We can offer a longer redemption period, a later start of redemption payments or an interest rate adjustment,” he said.

cep economist Matthias Kullas believes that a debt cut for Greece should only happen once Greece has implemented the bulk of the reforms agreed with its lenders. “Regarding the burden put on the creditors, it does not make any difference if they grant Greece longer maturities and lower interest rates or a nominal haircut,” Kullas argued. “Empirical research has shown that – at the same level of debt relief – a nominal haircut shows a stronger impact.”