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article imageEurozone considers zero interest rates on loans to Greece

By Katerina Nikolas     Nov 15, 2012 in World
The IMF and the European Union are at loggerheads over the way to tackle Greek debt, with IMF chief Christine Lagarde suggesting a further debt haircut for Greece from public creditors. EU ministers oppose such a scenario.
German Chancellor Angela Merkel is loathe to consider any further debt haircuts to Greece, as she is due to face the German electorate next year. According to Der Spiegel the IMF proposal to write off some of the publicly held Greek debt could cost Berlin up to €17.5 billion, a move unlikely to go down well with German taxpayers.
German Finance Minister Wolfgang Schäuble is also vehemently opposed to such a proposal, stressing other solutions to the Greek debt crisis should be considered.
The Telegraph reported Olli Rehn, European commissioner for economic and monetary affairs, categorically ruled out any further debt write off for Greece, saying "the loans made by euro-area governments to Greece 'won’t be touched'."
Lowering Greek loan rates may be one part of the program to ease Greece’s unsustainable debt load. To Vima reports the European Financial Stability Fund (EFSF) is considering drastically reducing the interest rates on Greek loans, with loans perhaps being offered with zero percent interest.
Der Speigel reported Germany has made profits of €400 million on the first €110 billion bailout package for Athens, and is considering passing those profits over to Greece. German government sources have said it could be damaging for the country to be perceived as profiting from the suffering in Greece.
More about loans to greece, Greece crisis, european financial stability fund, eurogroup, Imf
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