Debt relief won’t help Greece, says Germany’s finance minister

Germany finance minister Wolfgang Schaeuble says Greece must carry out structural reforms instead of receiving further debt relief

Greece must carry out “needed” structural reforms instead of receiving further debt relief if it wants to achieve sustainable growth and stay in the euro zone, Germany’s finance minister said on Sunday.

Wolfgang Schaeuble's comments to Bild am Sonntag came ahead of a meeting of euro zone finance ministers in Brussels on Monday to discuss short-term measures to lighten Greece's debt burden and assess progress in reforms set out in its third bailout program.

Last year’s third bailout saw Greece receive new loans of up to €86 billion. In exchange for its third aid package since 2010, Athens had agreed to increase taxes and tougher spending cuts.

Schaeuble, a senior member of Chancellor Angela Merkel's conservatives, said the Greek budget was hardly burdened by debt repayment after its European partners had already shaved interest rates and prolonged maturities for granted aid loans, Reuters reported.

Asked whether it might be time to tell German voters that a debt forgiveness for Greece was inevitable, Schaeuble told the newspaper in an interview: “That would not help Greece.”

“Athens must finally implement the needed reforms. If Greece wants to stay in the euro, there is no way around it - in fact completely regardless of the debt level.”

Greece's official creditors - the European Stability Mechanism (ESM), the ECB and the IMF - are assessing Athens’ delivery on reforms and fiscal targets set in its bailout program of up to 86 billion euros agreed last summer, the third aid package for Greece since 2010.

Greece hopes to swiftly conclude the review and secure short-term debt relief so that its bonds are included in the ECB's bond buying scheme and it can return to capital markets before 2018, when its current bailout expires.

The main sticking point in talks with lenders are unpopular labour reforms, including collective bargaining, a mechanism to set the minimum wage and giving companies more freedom to lay off workers.

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