Germany, ECB play tough round with Greece

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BERLIN/HELSINKI (Reuters) – German Chancellor Angela Merkel ruled out a debt writedown for Greece on Saturday, and a European Central Bank policymaker threatened to cut off appropriation to Greek banks if Athens does not determine to replenish a bailout package.

The euro zone’s paymaster and a ECB are both holding a tough line with Greece’s new revolutionary government, whose personality swept to feat final Sunday earnest that 5 years of austerity, “humiliation and suffering” were over.

Alexis Tsipras has also betrothed to renegotiate agreements with a European Commission, ECB and International Monetary Fund “troika” and write off most of Greece’s 320 billion euro ($360 billion) debt, that during some-more than 175 percent of sum domestic product is a world’s second-highest after Japan.

Merkel flatly deserted such a possibility.

“There was already a intentional waiver by private creditors; Greece has already been free from billions by a banks. we don’t see a serve debt haircut,” she told German daily Die Welt in an talk published in a Saturday edition.

“Europe will continue to uncover oneness for Greece, as for other countries strike quite tough by a crisis, if these countries commence their possess reforms and assets efforts,” Merkel combined in a thinly potential hazard to Athens.

Without a support of general lenders, Greece would shortly find itself behind in an strident financial crisis.

Unable to daub a markets since of sky-high borrowing costs, Athens has adequate money to accommodate a appropriation needs for a subsequent integrate of months. But it faces around 10 billion euros of debt repayments over a summer.

“I’M WAITING,” MERKEL TELLS ATHENS

Greece’s new supervision non-stop talks on a bailout with European partners on Friday by refusing to extend a module or to concur with a general inspectors overseeing it.

Separately, a French financial method pronounced on Saturday that Greek Finance Minister Yanis Varoufakis will accommodate with his French reflection Michel Sapin in Paris on Sunday and emanate a matter afterwards.

Europe’s bailout module for Greece, partial of a 240 billion euro rescue package also involving a International Monetary Fund, expires on Feb. 28. A disaster to replenish it could leave Athens incompetent to accommodate a financing needs and cut a banks off from executive bank liquidity support.

The ECB does not accept Greek emperor holds as material in a refinancing operations as they are next investment grade. However, it allows executive bank financing to Greek banks as a nation is in a bailout program.

Erkki Liikanen, a member of a ECB’s policymaking Governing Council, pronounced that funding, too, could dry adult if Greece does not sojourn in a program.

“Greece’s module prolongation will finish in a finish of Feb so some kind of resolution contingency be found, differently we can’t continue lending,” Liikanen, also a administrator of Finland’s executive bank, told open broadcaster YLE.

Merkel pronounced a ECB’s Jan. 22 preference to siphon billions of euros into a euro section with a bond-buying module did not meant countries would finish efforts to figure adult their economies with constructional reforms.

She put a responsibility on a new Greek supervision to benefaction a convincing mercantile policy.

“The idea of a process was and is that Greece stays a permanent partial of a euro-community,” Merkel said.

“To that end, Greece and a European partners make their contribution. Apart from that, we am now watchful to see what concepts a Greek supervision will present.”

($1 = 0.8861 euros)

(Writing by Paul Carrel; Editing by Hugh Lawson)

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