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Greece

Greek PM sees perpetual bailouts if creditors fail to ease debt

Greek Prime Minister Alexis Tsipras arrives at a European Union leaders summit in Brussels, Belgium October 21, 2016

Greek Prime Minister Alexis Tsipras warned his country’s creditors on Friday that a failure to extend a timely debt restructure would push the country into a perpetual spiral of bailouts.

Tsipras, who was speaking in Brussels, appealed to creditors to specify by the end of the year how Greece could ease its debt mountain, the highest in the euro zone.

A failure by the eurozone and other lenders to do precisely that was keeping badly-needed investment at bay and harming Greece’s prospects of economic recovery, he said.

“If these decisions are not taken on time … then the bailout programme will be at risk,” Tsipras said. “If Greece has no market access, then the Europeans will be constanly forced to keep Greece in bailouts, lending it money,” Tsipras said.

Greece wants debt relief and the country’s inclusion in the ECB’s bond buying programme to regain market access by 2018, when the current bailout programme expires.

Tsipras said he was optimistic there would be significant decisions on debt restructuring during a meeting of euro zone finance ministers in December.

Greece signed up to a bailout programme worth up to 85 billion euros in mid-2015, contingent on deep tax and pension reform and a series of privatisations.

In May, euro zone governments offered Greece debt relief in 2018, when the country’s current bailout accord – its third since 2010 – lapses.

They did not specify how it could be done, partly because of Germany’s view that no immediate remedial action was required, and the position of the International Monetary Fund that decisions were required now.

But one senior European Central Bank official warned on Friday any debt restructuring should not deflect the country from its reform commitments.

Francesco Drudi, who represents the ECB in bailout discussions with Athens, said any projections on Greece’s future economic outlook would take debt relief into account.

But “debt relief measures should be designed in a way that does not discourage the path of reforms,” he told a conference in Athens.

Drudi also said the ECB would need to take a new sustainability analysis into account before deciding whether Greek debt can be included in its quantitative easing programme.

Inclusion in the asset purchase scheme would cut Greece’s debt servicing costs.

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