EU Economics Affairs Commissioner Olli Rehn has backed a delay for Greece in the repayment of its 110-billion-euro rescue loan which was pulled together by the European Union (EU) and the International Monetary Fund (IMF) in May.

Rehn said EU finance ministers were ready to look favourably on a delay in the face of concern about Greece’s ability to meet a 2015 deadline given the parlous state of its economy.

During his address to the Greek parliament on Thursday the European Commissioner assured Greek parliamentarians that the repayment period for Greek loans will be extended without imposing any new terms, specifying that the discussion will take place on the basis of the existing memorandum to which an amendment will be added.

“We stand ready to make the concrete proposal early next year, and I’m certain that it will receive the support of EU finance ministers,” EU Monetary Affairs Commissioner Rehn told reporters.

He went on to say that the Commission was “in favour of a prolongation of the repayment period of the loans … in order to avoid the big hump of refinancing” in 2014 and 2015.

There are fears Greece will be unable to cope with a spike in debt repayments in 2014 and 2015 as it pays back loans from the three-year EU and International Monetary Fund program that ends in 2013.

Rehn also appeared confident that the Greek government’s 2011 budget was capable of reducing the public deficit by 2.5 percent of GDP so that no additional measures would be needed.

“Greece is on the proper course and on the right path, making great progress in a programme of fundamental reforms,” Rehn said while briefing the Greek Parliament.

He defended the terms of the Memorandum and stressed that the medium and long-term goals of the package of measures was to allow growth and make Greece competitive.

He noted that structural changes caused people to worry about the future when they had to be made rapidly and change habits but added that this was unavoidable at the current time.

Rehn also disclosed that the EU was preparing a longer-term approach to assisting Eurozone countries in financial jeopardy.

“We are currently preparing a complete systemic response to the systemic crisis of the EU,” he told reporters. “A systemic crisis calls for a systemic response.”

The head of the International Monetary Fund (IMF) Dominique Strauss-Kahn on Tuesday also expressed support for a plan to extend the repayment period of EU-IMF loans to Greece.

“I am personally impressed by the efforts Greek people make to exit the crisis, and that stands for the whole international community. The government introduced bold measures and Greek electorate recognised the need of these policies,” noted the IMF chief.

Source: ANA, AP, Reuters, AFP