European authorities have not contacted the International Institute of Finance about plans to let Greece buy back its bonds at current market prices to reduce it debt level, IIF Managing Director Charles Dallara said during a press briefing Wednesday, says mninews.
According to the report, the IIF, which helped negotiate the private sector involvement in Greece´s restructuring, would not be in favor of such a deal, Dallara said.
European Central Bank Executive Board member Joerg Asmussen recently floated the idea of the Greek government using borrowed funds to buy back its own sovereign debt from financial markets at current depressed prices in order to reduce its debt ratio.
"At the moment it looks like Greece´s debt level will rise to well above the target of 120 percent of GDP by 2020," Asmussen said. "Thus, one has to consider elements that could make it possible to achieve that goal. One possibility would be buying back debt."
"The best use of any additional available Eurozone-related funds to cover that [financing] gap would be to help take down the interest charges of Greek debt, not use the funds for market based buy backs which after all do not address the heart of the problem today," Dallara said.
"Since the Greek debt restructuring which we negotiated, private claims on Greece have fallen from well above half of the total claims of the government of Greece to something closer to a quarter," Dallara reminded.