FRANKFURT (MNI) – European authorities have not contacted the The
International Institute of Finance about plans to let Greece buy back
its bonds at current market prices to reduce it debt level, IIF Managing
Director Charles Dallara said during a press briefing Wednesday.
The IIF, which helped negotiate the private sector involvement in
Greece’s restructuring, would not be in favor of such a deal, Dallara
said.
European Central Bank Executive Board member Joerg Asmussen
recently floated the idea of the Greek government using borrowed funds
to buy back its own sovereign debt from financial markets at current
depressed prices in order to reduce its debt ratio.
“At the moment it looks like Greece’s debt level will rise to well
above the target of 120 percent of GDP by 2020,” Asmussen said. “Thus,
one has to consider elements that could make it possible to achieve that
goal. One possibility would be buying back debt.”
“The best use of any additional available Eurozone-related funds to
cover that [financing] gap would be to help take down the interest
charges of Greek debt, not use the funds for market based buy backs
which after all do not address the heart of the problem today,” Dallara
said.
“Since the Greek debt restructuring which we negotiated, private
claims on Greece have fallen from well above half of the total claims of
the government of Greece to something closer to a quarter,” Dallara
reminded.
** MNI Frankfurt bureau tel.: +49-69-720142 **
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–email: jtreeck@mni-news.com
