Former European Union finance chief Olli Rehn, who was in the middle of handling Greece’s economic crisis, said a longer repayment term is likely for international loans but not a debt cut.
Awaiting the results of critical Jan. 25 elections, both the ruling New Democracy Conservatives of Prime Minister Antonis Samaras and his rival, the major opposition Coalition of the Radical Left (SYRIZA) want a restructuring of the 240 billion euros ($306 billion) owed the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB).
Samaras is leaning toward asking for a longer repayment term and lower interest while SYRIZA leader Alexis Tsipiras said he wants a big cut in how much the country should repay, which has fueled fears that could drive Greece out of the Eurozone.
The euro area, which has already eased repayment terms on emergency loans to Greece, has committed to considering “further measures and assistance” to ease Greece’s debt burden.
“It doesn’t mean that there would have to be a classic haircut on capital,” Rehn, now a Vice President of the European Parliament, said in an interview with the Bloomberg news agency.
“Instead, I would expect that the Eurozone countries would rather look at ways and means of improving debt sustainability by further extending loan maturities,” he said.
“My personal view is that there’s not much room for maneuver in renegotiating the terms of the economic-adjustment program,” he said.
“From the Greek perspective, the best way to move forward is to reduce any uncertainty, which means first reducing the time needed to build a new government and second confirming and negotiating the next steps on the EU-IMF program,” Rehn said.
Rehn was a hardliner on austerity, backing Troika demands for big pay cuts, tax hikes, slashed pensions and worker firings in Greece to insure banks would get paid back first.