Europe firm that Greece must repay debt

Europe showed a willingness yesterday to give Athens more time to pay back its debt‚ but little sign that it would yield to a new Greek government’s demands of debt forgiveness.

European Union leaders and policymakers responded to Greek antibailout party Syriza’s election victory on Sunday with warnings that a debt restructuring for Greece would send the wrong message to other eurozone members.

Eurozone finance ministers gathered in Brussels yesterday to consider how to deal with Greece after the change of government‚ especially given that the existing Greek bailout programme expires on February 28.

The euro fell to an 11-year low as Syriza’s victory set Athens on a collision course with international lenders and potentially threatened its place in the single currency.

Without a bailout plan, Athens will not be eligible for the European Central Bank’s (ECB’s) plan of government bond purchases and will have problems financing itself on the market.

If Greece refused to service its debt owed to the eurozone‚ private investors were unlikely to lend to it either‚ officials said. Eurozone finance ministers are likely to signal they could extend the bailout for Athens to give the new government time to negotiate economic policy with international lenders and talk about more time to pay back what Greece owes them.

ECB board member Benoit Coeure said the bank would not take part in any debt cut for Greece.

– Reuters


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