Germany is preparing a new 10-20 billion euro package for Greece before the EU elections in May, according to Der Spiegel magazine.
The package will be large enough to cover Greece’s 9.4billion euro redemptions in May and will be tied to Greece’s renewed commitment to speed up the already agreed reforms.
According to the article, Germany is considering several alternatives to support Greece including: 1) a new “limited additional programme” for Greece up to 20 billion euros funded by the European Stability Mechanism (ESM) without the participation of the International Monetary Fund; 2) the issuance of Greek government bonds to cover part of the identified funding gap for 2014; 3) a “further debt haircut”, although the latter was once again dismissed as a plan by the German Finance Ministry spokesperson.
Although the Der Spiegel article seems to suggest there will be no new commitments attached to the new package, Greece still has several outstanding prior actions attached before the next instalment of money by its lenders. Most of these are structural reforms and competition-enhancing actions (e.g. scrapping third-party levies, removing barriers to competition in
several industries etc.).
Marco Semmelmann, spokesperson of the German finance ministry rejected early this week the Der Spiegel article, stating that “There is no new situation regarding Greece.” When asked about the possibility of a debt write down, he said: “I can deny that categorically.”
Source: capital