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BERLIN (MNI) – German Finance Minister Wolfgang Schaeuble told
parliamentarians on Wednesday that a debt buyback program for Greece was
indispensable, Michael Fuchs, a lawmaker from Chancellor Angela Merkel’s
CDU said.

The money would need to come from Europe’s temporary rescue fund,
the European Financial Stability Facility (EFSF), and would be on top of
the already planned aid measures for Greece, Fuchs told reporters after
a briefing from Schaeuble.

Schaeuble said the EFSF’s volume would have to be increased by E10
billion to fund the Greek debt buyback program, another official who
attended the parliamentary meeting said under condition of anonymity.

The finance minister gave the impression there is a real risk that
the International Monetary Fund could pull out of the Greek rescue
program if no solution on the country’s debt sustainability were found,
Fuchs said, noting that Schaeuble again stressed the importance of
keeping the IMF on board.

Germany still opposes a haircut on Greek debt held by the public
sector, Norbert Barthle, another CDU lawmaker said. “I expect that we’ll
do something with the interest rate level and the maturities of the
loans” for Greece, said Barthle, who is the CDU/CSU’s parliamentary
budget speaker. Moreover, Greece could use the proceeds from the future
privatization of states assets to buy back its own bonds, he said.

An official sector haircut, however, would be “completely
counter-productive”, Barthle stressed, because this would mean that
Germany could no longer give guarantees for loans to Greece. “It is not
possible to guarantee loans which we expect to default,” he said.

Extending the Greek aid program beyond 2014 “will cost around E14
billion – that’s what we’re talking about now,” the lawmaker said.

Both Barthle and Fuchs said they expected Eurozone finance
ministers to come to an agreement at the Eurogroup meeting next Monday.
The Bundestag could then vote on the measures the following Friday,
Fuchs said.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@mni-news.com

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