Financial Times
Editorial
May 31, 2011
The next report on Greece’s rescue programme is likely to confirm that Athens cannot return to markets in 2012 as planned. Without 12 months of financing secured, the International Monetary Fund may not disburse its share of the next loan tranche. The financial problem this throws up can be solved. The political challenge is harder.
Eurozone leaders know that the Greek rescue plan may require more money to achieve its goal – hence the buzz about a “reprofiling” of Greek debt, in which private creditors would extend their claims’ maturities while principal and interest would not be touched.
Some criticise a reprofiling for making nary a dent in Greece’s indebtedness. This is a bad argument. The proposal is made within the understanding that has guided the rescue from the start: Athens can and should service its debts but not be forced into default by a shuttered bond market. Given this premise, a maturity extension may act as a useful remedy for Athen’s looming refinancing hump.
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