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FINANCE Minister Yanis Varoufakis’s decision to drop the idea of a flat debt write-off in favour of issuing bonds to Greece’s creditors boosted hopes of a deal today.
Greek stocks led a European market rally after Mr Varoufakis said that the Syriza government was willing to accept an alternative of making his country’s debt load more bearable.
Sighs of relief came from the European Union, where commission president Jean-Claude Juncker said that the bloc would “have to adapt a certain number of our policies” to accommodate Athens.
Mr Varoufakis, who flew to Italy today from London, had floated his bond idea on Monday, suggesting exchanging Greece’s debt to its bailout creditors for bonds that would be repaid only if Greece’s economy grows.
He also offered so-called “perpetual” bonds, allowing issuers to pay interest forever while foregoing the principal.
Previous Syriza insistence on a write-off, which would have implied a cut in the face value of Greek bonds held by eurozone countries and the European Central Bank had been opposed by the EU and most fiercely by German politicians and bankers.
Chancellor Angela Merkel played it cool, refusing to comment on the bond proposal while not rejecting it outright.
Greece has to strike a comprehensive deal with its creditors by the end of June as otherwise it would be unable to repay £5.3 billion-worth of bonds maturing in July and August.
Prime Minister Alexis Tsipras had initially insisted on a root-and-branch overhaul of Greece’s so-called bailout, including the austerity budget measures that creditors had required. His government froze some privatisation plans, raised the minimum wage and re-employed cleaners sacked by the Finance Ministry.
Mr Tsipras will meet Mr Juncker in Brussels today before travelling to Paris. Mr Varoufakis will meet European Central Bank president Mario Draghi in Frankfurt and possibly German Finance Minister Wolfgang Schaeuble in Berlin on Thursday.
The Syriza government refuses to negotiate with the troika officials of the ECB, IMF and EU commission.
