Washington: Germany and several other Eurozone nations are pushing for Greece to impose larger losses on its creditors as they seek changes to a second rescue package for the debt-ridden country, European officials said on Friday.
Germany's finance minister warned that a second massive bailout package for Greece — tentatively agreed in July — may have to be re-evaluated after the country's debt inspectors discovered problems in implementing previous promises. This re-evaluation could include changing the terms of an agreed voluntary contribution from banks and other private investors to Greece's rescue, two European officials said.
One of the officials said that Germany and other rich Eurozone nations including the Netherlands and Austria are now pushing for an "orderly default" by Greece, which would entail losses for investors that go beyond the 21 per cent cut in the face value of government bonds foreseen under the voluntary contribution.
"The German attitude is particularly worrisome," said the official. Both officials were speaking on condition of anonymity because of the sensitivity of the issue.
The comments underline how confidence is eroding among core Eurozone countries over whether they can actually save Greece, whose debt is close to 160 per cent of gross domestic product and whose economy looks now set for a fourth straight year of recession.
Some economists have warned that imposing sharp losses on private investors would trigger turmoil in Europe's banking system and could push already bailed-out Ireland and Portugal, as well as struggling Italy and Spain, into default, too.
The growing disagreement among Eurozone nations, who've been keeping Greece afloat with a first, €110 billion (Dh545.31 billion) bailout since May 2010, comes at a critical moment.
Athens is still fighting to receive a crucial €8 billion installment of its first rescue package, without which it would default on its debts within weeks.
"I would be surprised if the pre-conditions for the payment of the next installment in September had changed, but not the pre-conditions for an additional programme for Greece," German Finance Minister Wolfgang Schaeuble said.
