Merkel rejects any debt cut for Greece

Chancellor Angela Merkel has reiterated that Germany opposes an outright debt cut for Greece.

Merkel said during a visit Thursday to the Bosnian capital, Sarajevo, that “a classic haircut is out of the question for me. That hasn’t changed between the day before yesterday and today.”

Greece has to produce a finalized reform plan by the end of the day. Merkel says she isn’t in a position to assess whether that plan will meet creditors’ expectations.

Greece is seeking debt relief and the International Monetary Fund argues that the country’s massive debt does need restructuring. Germany, though, has resisted calls for debt relief before Greece announces economic reforms.

3:35 p.m.

The eurozone’s 19 finance ministers are set to meet on Saturday to assess Greek proposals to secure another financial bailout, which would ease the pressure on the country’s economy and avoid its potential exit from the euro.

The afternoon meeting in Brussels will also prepare the ground for Sunday’s summit of the 19 eurozone leaders, which will be followed by one of the wider European Union, which will involve all 28 leaders, officials said.

Sunday has the feel of being a make-or-break date for Greece. Without a deal, Greece could effectively be left to its own devices by Monday morning. And that could mean the collapse of its banks and the return of the country’s ancient currency, the drachma.

In the run-up to the weekend meetings, the mood music surrounding Greece appears to be getting more positive. Markets certainly think so, with the Stoxx 50 index of leading European shares up 2.1 percent Thursday.

3:10 p.m.

Irish Finance Minister Michael Noonan thinks it’s probable that Greece can strike a third bailout deal with European partners this weekend.

He credits Athens’ switch of finance minister for improving the negotiating mood and repairing trust.

Speaking to Newstalk radio in Dublin, Noonan said this week’s surprise replacement of Yanis Varoufakis with Euclid Tsakalotos has encouraged others at the table to believe that Athens wants a realistic deal, not endless brinkmanship.

For months, Noonan said he and his peers in the 19-country eurozone found Varoufakis evasive and difficult to pin down on specifics.

On the other hand, Noonan said he found Tsakalotos, at his first eurogroup meeting Tuesday, straightforward and “interesting,” citing his background as a wealthy Marxist economist.

“It seems now they are serious,” said Noonan, who now rates the chance of a deal with Greece at “better than 50 percent.”

2:50 p.m.

European stock markets pushed higher after a leading official indicated that discussions over Greece’s debt burden should be on the table in Sunday’s summit of the European Union’s 28 leaders.

The Stoxx 50 index of leading European shares was up 2 percent.

The advance came after Donald Tusk, who will chair this Sunday’s meeting in his capacity as European Council President, said any Greek deal should include proposals from creditors over how to make the country’s debts sustainable.

In a tweet, Tusk said Greece’s reform proposals, due later, need to be “matched by (a) realistic proposal from creditors on debt sustainability to create win-win situation.”

1:55 p.m.

Donald Tusk, who will chair this Sunday’s meeting of European leaders, says any Greek deal has to be matched with realistic proposals from creditors over how to make the country’s debts sustainable.

In a tweet, Tusk said Greece’s reform proposals, due later, need to be “matched by (a) realistic proposal from creditors on debt sustainability to create win-win situation.”

Tusk’s call echoes comments from Christine Lagarde, the International Monetary Fund’s managing director, on Wednesday.

Greek Prime Minister Alexis Tsipras has insisted that debt relief should form part of any resolution to the Greek crisis at Sunday’s summit of the European Union’s 28 leaders. Germany, though, has resisted calls for debt relief without reforms.

Tusk also said in a tweet he expects, following a telephone call with Tsipras, to receive “concrete, realistic reform proposals today” from Greece.

1:30 p.m.

Russian Foreign Minister Sergey Lavrov says it would be wrong to say his country is enjoying the spectacle of Europe struggling to deal with Greece’s debt crisis.

He said Russia has no interest in “throwing kindling onto this fire,” and wants to see a quick resolution acceptable to all sides.

Russia, he said, is interested in a “strong, functioning, economically growing European Union.

Any idea that Moscow is rubbing its hands over the crisis European partners is wrong, he added.

“It is a distortion of our position and our interests,” he said.

Relations between the European Union and Russia are at a low ebb as both sides have exchanged sanctions over the crisis in Ukraine.

There has been talk in recent weeks that Russia may help Greece out financially but that has been dismissed by the Kremlin.

12:50 p.m.

European markets are posting solid gains amid hopes Greece will finalize a plan of reforms and following a rebound in Asia.

Among major indexes, Germany’s DAX was up 1.4 percent while France’s CAC 40 rose 1.6 percent. The euro, however, was down 0.4 percent at $1.1035. The Athens stock market remained closed, alongside the banks.

The Greek government has until the end of the day to submit a plan of economic measures it will take in exchange for a new three-year program of loans. The creditors will review the measures before European leaders convene Sunday to decide on Greece’s fate.

“Signs of unhappiness at the proposed deal could easily reverse the good feeling … but for now markets just appear to be pleased that negotiations are underway once again,” said Chris Beauchamp, senior market analyst at IG.

11:15 a.m.

A German member of the European Central Bank’s governing council says Greek banks should not get more emergency credit from the central bank unless a bailout deal is struck.

Jens Weidmann said in a speech Thursday it’s up to eurozone governments and Greek leaders themselves to rescue Greece.

Weidmann said the central bank “has no mandate to safeguard the solvency of banks and governments.”

The ECB capped emergency credit to Greek banks amid doubt whether the country will win further rescue loans from other countries. The banks closed and limited ATM withdrawals because they had no other way to replace deposit flight.

Weidmann said he welcomed the fact that central bank credit “is no longer being used to finance capital flight caused by the Greek government.”

10:45 a.m.

EU Economics Commissioner Pierre Moscovici is hopeful that a new Greek bailout deal is possible, in exchange for “concrete, complete” reform proposals from Greece’s government.

Moscovici said Thursday on France-Inter radio that Thursday is “a decisive day” for Europe, as Greece’s creditors await a detailed economic reform plan from Greek Prime Minister Alexis Tsipras’ government before a midnight deadline.

Moscovici said, “I have the sense that the dialogue is established, or restored, and that there is a way out.” Failure to reach a deal could be the first step toward Greece leaving the shared euro currency.

Greece requested a new three-year rescue from its European partners Wednesday. International creditors disagree over whether to award the country debt relief. Moscovici said that is not currently under discussion.
source: the state

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