8th August 2014

Juncker refuses Greek debt “haircut”

During his visit in Athens last week (4 August), the European Commission President-elect Jean-Claude Juncker refused speculations, that a “haircut” of the Greek debt will be part of the planned Greek debt relief. Since the beginning of the Greek sovereign debt crisis in 2010, Greece has received two eurozone- and IMF-funded bail-outs and was thus able to avoid bankruptcy. Tough austerity measures imposed by the Greek government have begun to pay off as the country is expected to end its six-year-long period of recession this year and primary budget surplus has also been reached, enabling Greece to partially return to financial markets to borrow money. Yet Greek sovereign debt is still well above 100% of its GDP and also well above the eurozone average, not to speak about the 60% GDP level required by the Stability and Growth Pact. Since Greece progressed well in employing austerity measures and its fiscal indicators are satisfying, a debt relief was announced to take place later this year. According to Juncker, however, no cutoff of the debt is to be expected. Instead, more conservative measures, like prolonged bond maturities and lower interest rates, are to be expected.

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Members of the American Chamber of Commerce in the Czech Republic