–Adds Comments By Deputy Fin Min Kampeter To Story Sent 11:41 GMT

BERLIN (MNI) – The German government said Monday that it hoped for
an accord at the Eurogroup meeting to close Greece’s financing gap, but
that Eurozone finance ministers were not discussing a haircut on
Greek debt held by the public sector.

“This debt haircut is for other states in the Eurozone no topic as
well, therefore the finance ministers are not discussing it,” government
spokesman Steffen Seibert said at regular press conference here. “It is
also not a topic for the ECB,” he remarked.

Seibert argued that such a debt haircut would violate the bailout
interdiction in the EU treaties and as well as national budget rules of
Germany and several other Eurozone states. A violation of these rules
would lead to “a massive loss of confidence,” he said.

From a political viewpoint, a Greek debt haircut might prompt other
crisis states in the Eurozone to demand equal treatment, Seibert
cautioned.

German Deputy Finance Minister Steffen Kampeter, speaking at a
conference of the Levy Economics Institute here today, said all Eurozone
member states except for Greece were opposed to a debt haircut. The
problems regarding the Greek aid package would be solved “without a
haircut,” he vowed.

ECB Executive Board member Joerg Asmussen said over the weekend
that he also opposed a haircut on Greek debt. “In order to close the
financing gap we need a package of measures which contains, amongst
other things, a significant cut of interest rates on the rescue loans
and a bond buyback by Greece,” Asmussen told German daily Bild. “A debt
haircut is not part of it,” he stressed.

German Finance Wolfgang Schaeuble said on Thursday “it does not
make any sense to talk about a debt haircut, it is a way to nowhere and
it is not worth any discussion.”

On Wednesday, Schaeuble said that Eurozone finance ministers “agree
that a debt buyback program [for Greece] can be undertaken.” In order to
finance this debt buyback program, Germany favors an increase of the
funds of Europe’s temporary rescue fund, the European Financial
Stability Facility (EFSF), by E10 billion, the minister said.

Some Eurozone governments would like to see the interest rate on
the loans to Greece reduced to close to zero, Schaeuble said. While
Germany and some other states want to lower the interest rate only by 90
basis points from the current 150 basis points above Euribor, other
governments want to cut it to 25 basis points above zero, he explained.

A potential deal may also allow states to choose from among
different options for Greek debt relief, Schaeuble said. Some could opt
for cutting the interest rate more deeply, while others could go the way
of an EFSF increase, he explained.

Some states might also hand over to Greece the profits they get
from their national central banks from the ECB’s previous SMP bond
buying program, Schaeuble said. The profits are estimated to total E4.2
billion, he noted.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@mni-news.com

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