BERLIN • German Chancellor Angela Merkel has again ruled out forgiving some of Greece's crippling debt, but said Berlin was open to a flexible repayment plan.
Dr Merkel told public broadcaster ARD on Sunday that "there can't be a classic haircut - forgiving 30 per cent or 40 per cent of debt - in a monetary union".
She noted that Greece had received other forms of debt relief before, including a "voluntary writedown for private creditors, extended maturities and lower interest rates", adding: "We can discuss possibilities along those lines again."
Dr Merkel said such steps could only be agreed when initial terms of a new €86 billion (S$128 billion) bailout package are hammered out.
The International Monetary Fund, one of Greece's creditors alongside the European Union and European Central Bank (ECB), caused a stir this month with a report criticising the latest bailout deal and warning that lenders would have to go "far beyond" existing estimates for debt relief.
What counts is what was agreed at the talks... Now, we have said everything that is to be said about that, and are looking to the future.
GERMAN CHANCELLOR ANGELA MERKEL, saying that any talk of a possible "Grexit" - Greece exiting the euro zone - was now off the table
ECB chief Mario Draghi has added his voice to calls for debt relief for Greece - whose debts amount to 180 per cent of economic output - saying the main question was what form this relief should take.
Dr Merkel won a German parliamentary vote last Friday to begin talks on a new bailout package.
But more deputies from her conservative camp have rebelled in successive votes on Greece and hardline Finance Minister Wolfgang Schaeuble has suggested it might be better for Greece to take a five-year "time-out" from the euro.
He said last Saturday that he was prepared to resign rather than go against his convictions in the upcoming negotiations with Greece.
Asked about the comments, Dr Merkel said she and Mr Schaeuble would continue to be Germany's negotiators in the talks.
Vice-chancellor Sigmar Gabriel, who is also Economy Minister and leader of the Social Democrats, coalition partner to Dr Merkel's conservatives, broke ranks and criticised Mr Schaeuble for raising the prospect of a Greek exit from the euro zone in the rescue talks.
Dr Merkel said any talk of a possible "Grexit" was now off the table. "What counts is what was agreed at the talks" during an emergency euro zone summit last weekend in Brussels where leaders agreed to negotiate another Greece bailout.
The Greece saga has stretched Dr Merkel, Europe's most powerful leader, to the political limit.
Mr Schaeuble's hardline stance and scepticism towards Greece among Germans have pushed her towards a tough line at a time when the Social Democrats and key European partners like France favour a more conciliatory approach.
AGENCE FRANCE-PRESSE , REUTERS