FRANKFURT (MNI) – The rate offered to Greece for loans as part of
the Eurozone’s E30 billion contingency aid package is not a subsidy,
European Central Bank Executive Board member Juergen Stark said in an
interview with the German daily Frankfurter Allgemeine Zeitung, released
Friday.
Stark, the ECB’s chief economist, also said Ireland should serve as
a model for Greece regarding response to fiscal problems.
Asked if the interest rate of 5% on a 3-year loan to Greece agreed
by Eurozone finance ministers is a subsidy, Stark said, “the high market
interest rate at the end of the first week in April [on Greek bonds] was
driven by uncertainty. That is not the right reference period for
judging the market rate.” He was referring to the fact that market
interest rates on comparable Greek sovereign debt were closer to 7% at
the time the EMU finance ministers announced their plan.
Stark noted that conditionality is added into the set interest
rate. “The interest rate Euribor plus a 300 basis point premium plus a
one-time fee of 50 basis points is justified. It does not contain an
element of subsidy,” he insisted.
Stark said that Ireland, “from its own strength,” set the course
for a sustainable fiscal policy. Therefore, the country should serve as
a model for Greece, he said.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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