Merkel says there should be no debt reduction for Greece

(From left) French President Francois Holland, President of the European Parliament Martin Schulz, and German Chancellor Angela Merkel talk during a meeting in Strasbourg, France, on Jan 30, 2015. -- PHOTO: EPA
(From left) French President Francois Holland, President of the European Parliament Martin Schulz, and German Chancellor Angela Merkel talk during a meeting in Strasbourg, France, on Jan 30, 2015. -- PHOTO: EPA

BERLIN (AFP) - German Chancellor Angela Merkel on Saturday rejected the prospect of debt relief for Greece, adding to tensions between the radical new Greek government and its international creditors.

“There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece’s debt,” Merkel said in an interview with the Hamburger Abendblatt newspaper published on Saturday.

“I do not envisage fresh debt cancellation,” she said.

The new Greek government has already begun to roll back years of austerity measures demanded by the EU and the International Monetary Fund in return for a 240 billion euro (S$324 billion) bailout granted to avoid a financial meltdown in 2010, and says it will negotiate to halve the debt.  

At the start of 2012, Greece restructured its debt in a deal involving private creditors who took “haircuts” or wrote down parts of their holdings. This cut Greece’s total debt burden by around 100 billion euros.  

But the country is today still lumbered with a debt pile of more than 315 billion euros, upwards of 175 per cent of gross domestic product (GDP), a record for the European Union.

“Europe will continue to show its solidarity with Greece, as with other countries hard hit by the crisis if these countries carry out reforms and cost-saving measures,” Merkel said.

Greek Prime Minister Alexis Tsipras will visit Italy and France on Tuesday and Wednesday, but has no immediate plans to visit Germany, Europe’s biggest economy and effective paymaster.