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Interest rate on Greek bailout loan could be cut

Interest rate on Greek bailout loan could be cut
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The interest rate on Greece’s bailout loan may be lowered in an effort to avoid debt restructuring.

Athens was forced to deny pulling out of the euro and going back to the drachma after a German newspaper reported that EU ministers had discussed it at a meeting on Friday. In fact, the talks in Luxembourg focused on how to deal with the debt crisis, showing Greek commitment to the single currency. Economist Vagelis Agapitos, says leaving the euro would be unwise:

“When you have an unreliable country, the only salvation is that you have a reliable currency, so you’re not going to abandon the one reliable piece of tool or equipment that you have in these uncertain and difficult times.”

However, there are some who still see restructuring as the best option. Oliver Roth of Close Brothers Seydler Bank is one of them:

“I think there should be an attempt to solve the problem in an orderly fashion. The situation in Greece has to be under control the whole time, there has to be restructuring and if that’s done in a coordinated way, there would be limited damage.”

Mindful of possible debt restructing in the future, credit agency Standard and Poor has cut Greece’s credit rating, putting it on a par with Belarus. Another cut would make it the lowest rated country in Europe.

Ireland is using the talks on Greece to advance its own case for lower interest rates on its bailout loan. Dublin’s calls for concessions have been blocked by Germany and France who want Ireland to raise its low corporation tax.