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Cut Greece Some Slack: Creditor Group

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Greek flagGreece should be granted a lower interest rate on its 130-billion-euro ($169.690 billion) rescue package. Not only that, it should be given at least two more years to pay it back, said Charles Dallara, managing director of the Institute of International Finance (IIF)—the group that serves as the chief negotiator for the country’s private-sector creditors.

Reuters reported Tuesday that Dallara advised such leniency be granted only after Greece has managed to deliver on the requirements already in place for it to get its bailout. And that’s the catch; Greece is having a tough time pushing through the measures demanded by the troika of the European Union, European Central Bank (ECB) and International Monetary Fund (IMF) in exchange for the bailout money.

“Once that has been done, and I am confident it will be done, Europe and the IMF should move quickly to extend the adjustment period for at least two years and provide the modest additional financial support for that extension to be effective,” Dallara said in the report.

He went on to say, “Only some 15-20 billion euros is needed. This can easily be realized in part by reducing interest rates on the loans which Europe and the IMF made to Greece on more concessional terms.” Dallara added that so far strategies designed to alleviate the Greek debt crisis focused too heavily on short-term austerity and had to devote more attention instead to improving Greece’s longer-term competitiveness.

While Christine Lagarde, managing director of the IMF, has said that lenders might be willing to provide Greece with a longer period in which to repay its bailout, Finance Minister Maria Fekter of Austria demurred. On Sunday she told a newspaper that while Greece might be granted “a few weeks” more, the notion of it being allowed to take an additional year or two to repay was a dead issue and neither would it be given any additional funds.


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