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AP Photo/Michael Probst
Eurozone

Bond fund suggests reducing Greek debt burden

Ireland should take note of major bond fund chief’s suggestions for Greece…

THE HEAD OF WORLD’S BIGGEST bond fund has said he believes the EU should relieve Greece of some of its debt because the strict level of savings will stifle the country’s economic recovery and growth, Reuters reports.

In an interview with Germany’s Der Spiegel, Mohamed El-Erian of Pacific Investment Management Company (Pimco) said debt should fall below 90 per cent of GDP.

El-Erian said investors would not return to Greece until the economy was growing again and he is not currently buying debt from Greece, Portugal or Ireland.

The suggestions could be helpful to Ireland, if it seeks to reduce the interest rates levied on the EU’s bailout package when a new government takes office next month.

Germany and France are spearheading the drive to bring tighter economic cohesion across the eurozone to strength the euro and increase the support offered by the EU’s bailout fund. Proposals include establishing common tax bases, aligning the retirement age, and removing inflation-related wage increases.

Further negotiations are due to take place in March, after the new Irish government has been formed, but Sarkozy and Merkel’s plan was criticised by a majority of EU leaders at Friday’s summit, according to the Wall Street Journal.

Read the story in full on Reuters >

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