–No Talk Of Greek Debt Haircut Now, Won’t Rule Out In Future

FRANKFURT (MNI) – Spain’s formal request for a bank bailout,
smaller than initially planned, is a sign that the Eurozone is
stabilizing, Austrian Finance Minister Maria Fekter said Monday.

The fact that Spain was seeking less than E40 billion in aid from
the ESM rescue fund is “a very strong signal that we have been able to
stabilize the euro as a whole,” Fekter told reporters ahead of a meeting
of Eurogroup finance ministers in Brussels.

Spain’s Economy Ministry earlier Monday made a formal request for
E36.968 billion of aid for the recapitalization of four nationalized
financial sector institutions. The country originally was given a credit
line of up to E100 billion in June.

Fekter also said there was no talk currently of a debt haircut for
Greece, though she suggested the issue could be revisited at a later
date. She stressed that Greece must still be incentivized to continue
with fiscal reforms.

“I want today to give a definitive no [to a Greek debt haircut]
because the Greeks must continue to make efforts,” Fekter said.

However, she also stressed that progress on the revised program
agreed by the Eurogroup would be re-evaluated in 2015. “Then we will
see,” she said, adding that “above all” Greece must return to debt
sustainability by 2022.

Last week’s package of aid measures to reduce Greece’s public debt
included lower interest payments and a debt buy-back plan, but no
official sector haircut. German Chancellor Angela Merkel in an interview
with Germany’s Bild newspaper Sunday would not rule out a haircut on
Greek debt held by the public sector after 2015.

Finance ministers including Fekter that were arriving for the
Eurogroup meeting also expressed confidence that the Greek debt buy-back
scheme – officially launched earlier Monday – would prove a success.

“I see no reason to think that it won’t be successful,” Irish
Finance Minister Michael Noonan told reporters. “We’ll see how it works

Noonan stressed that the package of measures agreed last week was
“sufficiently strong to put Greece in a solid place” and had made clear
politicians’ commitment to keep Greece in the Eurozone.

“Certainly all talk of any break in the Eurozone is now finished,”
Noonan said.

— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —

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