Greek Debt Plan Receives Cool Reception

Greek plans to swap government debt for bonds with interest payments linked to economic growth got a sceptical reception from euro zone officials on Tuesday as new Prime Minister Alexis Tsipras sought support for his proposals in Europe.  Finance minister Yanis Varoufakis on Monday floated the idea that Greek bonds held by the European Central Bank and part of the debt owed to euro zone governments — 53 billion euros of bilateral loans — could be swapped for either growth-linked, or perpetual bonds.

It was unclear if the idea entailed dropping demands for an official debt write-off or not. Varoufakis said Athens stood by its debt reduction demand but a source said the demand for a debt “haircut”, or cut in repayments, was no longer there.  Either way, euro zone officials negotiating financial assistance for Greece gave the debt swap a cool reception.

“We need more details. But first reactions are rather sceptical,” one euro zone official said. “There is a worry that it’s just a new trick how to do a haircut.”  Tsipras and Varoufakis have been touring European capitals in a diplomatic charm offensive since their election victory late last month.


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