Greece could earn more debt relief, says euro zone chief

ATHENS (AFP) - Greece could be rewarded with another cut in its debt by its international creditors if it continues to apply the terms of its economic recovery, euro zone chief Jeroen Dijsselbloem said on Thursday.

"Euro zone countries are prepared to do more if necessary to help Greece, on the condition that the programme is fully implemented," Mr Dijsselbloem told the Kathimerini daily in English, pointing to a Eurogroup decision on the issue last December.

Euro zone members will take stock of Greece's recovery progress before the summer of 2014, he added.

"There has been no decision on the specifics yet, so I cannot say whether there will be a write-off of bilateral debts at this stage. The point is that within the course of 2014, we will know if the programme delivers and if more is necessary to be done," Mr Dijsselbloem said.

Last year, Greece erased nearly a third of its overall debt through an unprecedented write-down of more than 100 billion euros (S$161 billion) in debt held by private creditors including banks and pension funds.

Nearly 30 billion euros of additional debt were subsequently recovered in a buyback achieved with bailout funds.

From 355 billion euros, or 170.3 per cent of gross domestic product (GDP), in 2011, Greece's debt fell to around 303 billion euros in 2012, or 156.9 per cent of GDP, according to the Greek statistics agency.

But it could climb to 175.2 per cent of GDP this year, according to European Union estimates, as Greece's recession-hit economy continues to shrink.

Athens last year received a two-year extension to 2016 in order to meet the fiscal targets set by its bailout programme, and get its spending gap below 3 per cent of GDP.

Mr Dijsselbloem on Thursday did not rule out that more time could be given.

"The commission is already taking a more differentiated approach on fiscal measures, allowing for some countries to take more time in reducing their deficit. That should also apply for Greece," he told Kathimerini.