German finance minister says Greek debt interpretation wrong

GERMAN Finance Minister Wolfgang Schaeuble said yesterday that media had interpreted “somewhat erroneously” comments by him seen as acknowledging the need for Greece to restructure its debt.

Schaeuble was speaking to reporters on the sidelines of an International Monetary Fund meeting in Washington.

The minister told German daily Die Welt in an interview earlier this week that “additional steps” would be needed if Greece’s debt was found to be unsustainable.

Those comments spooked financial markets, weakening the euro and driving Greek, Irish and Spanish bond yields higher

Government officials later insisted he had not implied a debt restructuring may be necessary, nor had he strayed from the coalition’s stance that strictly opposes any mandatory or even voluntary deal with creditors to reduce its liabilities, even if many economists argue this is both inevitable and desirable.

They said that “additional steps” could also refer to additional savings measures or sell offs of state assets. Greece gave broad outlined further moves on these issues yesterday.

“What was made out of that in the Anglo-Saxon media was somewhat misleading,” Schaueble said.

Berlin believes Greece has already been given more breathing room thanks to last month’s EU summit deal that substantially reduced interest rate costs on bilateral loans, stretched a redemption schedule and included a Greek pledge to raise 50 billion euros from the privatisation of state assets.

But Deputy Foreign Minister Werner Hoyer, a member of the junior coalition party Free Democrats (FDP) was also quoted yesterday as saying that a restructuring “would not be disaster” and analysts say some form of restructuring looks increasingly unavoidable.

If Greece’s creditors agreed that talks with Athens “would be helpful toward a restructuring of the debt, then of course this would be supported by us,” news agency Bloomberg quoted Hoyer as saying.