​Angela Merkel: Greece Must Pay Its Debt Amid Several Greek Cuts Already

Author: Michael StevensBy:
Staff Reporter
Mar. 5, 2015

German Chancellor Angela Merkel says Greece must pay its debt after the country had already been forgiven billions of euros by private creditors and banks. The left-wing party Syriza emerged victorious from last week’s elections after vowing to halve Greece’s debt, according to the San Francisco Gate. Greece’s new government insists it will honour pre-election promises to cut the country’s rescue loans and scrap painful budget measures that were demanded by the troika - the European Commission, European Central Bank and International Monetary Fund - in exchange for the bailout.

Merkel said in an interview with the Berliner Morgenpost, published on Saturday, that Europe will continue showing solidarity with Greece and other strugglers “if these countries undertake their own reform and saving efforts.”

Asked whether there will be a debt cut for Greece, Merkel replied: “I don’t see a further debt haircut.”

However, she stressed that Germany still wants Greece to stay in the eurozone.

Greece’s new finance minister Yanis Varoufakis has already refused to work with the troika of international lending partners.

In a statement on Friday, he said his country would not ask for an extension of the bailout program, “which is rejected by the people.”

He gave no indication of what Greece would do if it cannot reach an agreement by the 28 February deadline, according to the Daily Mail. The New Democracy party, which lost power in Sunday’s election, said the new government “does not understand what it is about to do.”

New Prime Minister Alexis Tsipras has taken a defiant stance toward Europe, insisting on debt relief from fellow eurozone members.

The Greek government has made clear its intention to roll back a series of overhauls-from privatizations to cuts in the minimum wage-undertaken in exchange for the European-led €240 billion bailout.

The government and Greece’s international lenders, led by the European Union, are now locked in a standoff over the current program that will expire at the of February.

The European Central Bank will stop lending to Greek banks if there is no agreement to keep the country’s bailout program in force, an ECB policy maker said.

In parallel with the bailout program, the ECB has exempted Greek banks from its collateral requirements and allowed them to access central bank liquidity that is vital for a functioning banking system.

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