Cyprus Mail

Rare growth-linked debt could work for Greece

Nobel prize-winner Joseph Stiglitz were among 18 eminent economists who recently wrote in a letter to the Financial Times that growth-linked debt relief should be part of a plan to help Greece recover

By John Geddie

Greece’s proposal to swap debt held by its euro zone creditors for bonds with payments linked to economic growth got a cool reception in European capitals this week, with one official calling it a “new trick” to a haircut.

It would be the first time official creditors signed up to an idea that is unpopular with private bondholders and only has a couple of private sector precedents. While some see the bonds as a reform incentive, others see a way to dodge paying up.

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