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BERLIN (MNI) – The new financial aid program for Greece is to be
adopted at an extraordinary meeting of Eurozone finance ministers on
July 3, German Chancellor Angela Merkel said Wednesday.

“The goal is to adopt the main features of the new Greek program at
an extraordinary meeting on July 3,” Merkel said at a public
parliamentary hearing here.

The talks with private investors about voluntary participation in
the new rescue package for Greece will take place in the next days, the
chancellor said. “It is important that a certain amount can be
quantified,” she stressed.

Government spokesman Steffen Seibert reaffirmed at a regular press
conference today that Germany wants a “substantial and quantifiable
contribution” of the private sector to the new Greek aid package.

Finance Ministry spokesman Martin Kotthaus said at the same press
conference that there are efforts underway to “substantiate” the
concrete amount of private sector involvement (PSI) by the Eurogroup
meeting on July 3.

There will be no special incentives for the private sector to
contribute to the Greek aid, Kotthaus said. Preserving a stable euro
“should be incentive enough,” the spokesman argued.

Merkel reckoned that the German government had always demanded only
a voluntary PSI. This is the only way, because “otherwise a credit event
could be triggered, which has to be avoided under all circumstances,”
she warned.

Such a credit event would have incalculable consequences, the
chancellor cautioned. “Nobody in the world knows who owns all the credit
default swaps [on Greek debt] and what it would mean if they became
due,” she pointed out.

A credit event would have contagion effects on other Eurozone
countries, Merkel warned. “We cannot cope with such processes,” she
said.

The chancellor criticized demands by Germany’s opposition parties
for a marked haircut on Greek debt. “This would be dramatically wrong,”
she said.

Even voluntary PSI “is supported only by very few [states] in
Europe,” the chancellor said. In that regard it is “a big success” that
France is now backing voluntary PSI, she said.

In other remarks, Merkel said there is currently no majority in the
European Union for the introduction of a financial transaction tax. “But
I will continue to lobby for it,” she vowed.

Commenting on the domestic economy, Merkel predicted that Germany
will see “above 3% growth” this year. The government’s standing
forecast, dating from April, is for only 2.6% growth.

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

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