Germany could consider letting Greece pay off its debt over a longer time but only if this does not amount to a backdoor way of reducting what it owed, the finance ministry said on Wednesday.
Germany, Europe’s biggest contributor of aid to Greece, has long resisted a debt writedown but an International Monetary Fund (IMF) study published on Tuesday showed Greece needs far more relief than European governments have so far contemplated.
The German government is also trying to reassure lawmakers sceptical about talks with Athens ahead of a vote on Friday.
The IMF report said European countries would have to give Greece 30 years grace on servicing its European debt, and dramatic maturity extensions. If not, it said, they must make annual transfers to Greece or accept deep haircuts (reductions) on existing loans.
Asked about the option of extending maturities, German ministry spokesman Martin Jaeger said: “Technically, this possibility exists,” adding it could be considered.
“But it will not be the solution if it leads to a significant reduction in the cash value (of the debt) as then we would in the end have nothing other than a debt haircut via the backdoor,” he said.
Jaeger added that Germany took the IMF’s analyses “very seriously”, but said Berlin still believed debt sustainability could be achieved in Greece through structural reforms and economic growth.
Provided Greek lawmakers support the bailout deal, agreed with euro zone leaders on Monday to stay in the euro, Germany will recall the Bundestag lower house of parliament on Friday to approve the start of detailed talks on the programme.
German Chancellor Angela Merkel is likely to get the green light thanks in part to support from her Social Democrat (SPD) junior coalition partners and some opposition parties.
But she faces a revolt within her own conservative ranks.
At a vote on an extension of the second bailout in February, a record number of conservative dissenters showed growing impatience with Tsipras’s anti-austerity government. In addition to 29 ‘no’ votes from Merkel’s conservative camp, some 109 conservatives signed statements saying they had reservations.
“The atmosphere in our parliamentary group is very tense when it comes to Greece, there are several colleagues who are still doubtful,” Eckhardt Rehberg, budget spokesman for the conservatives in parliament, told Reuters, adding he expected a broad majority of conservatives to back the talks.
Reflecting broad German resentment about helping Greece, he said the IMF proposal on extending debt maturities was “a demand that we cannot accept just like this.”
Another conservative MP said she was undecided how to vote.
“I think the legal requirements are difficult to make money available for Greece from the European Stability Mechanism (ESM),” Sabine Suetterlin-Waack told Reuters.