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Varoufakis: ‘Haircut is a dirty word’ for EU

Yanis Varoufakis told German business daily “Handelsblatt” that Greece would require a new international debt deal in order to meet obligations of almost 11.5 billion euros between June and August.

Saying that payment would be “impossible” without a deal going beyond this week’s four-month extension to Greece’s “bailout” program, Varoufakis added that Athens would not seek a “haircut” or write-down on its debts.

“No. Haircut is a dirty word. I’ve learned that much,” Varoufakis said, when asked if he was hoping for creditors to write off some of Greece’s debt. “Just as we don’t want to hear the word ‘troika’ anymore, so our creditors don’t want to hear the word haircut. I can understand that.”

One condition for the extension of Greece’s international loans was that the three institutions monitoring economic reforms in Athens – the International Monetary Fund, European Commission and European Central Bank – should no longer be collectively referred to as the “troika.”

Varoufakis said that there were “more intelligent solutions” than a write-down of Greek debt, naming as an example the idea of credit swaps. He suggested issuing sovereign bonds whose returns were tied to Greece’s GDP figures: “Then our creditors would also have an interest in Greece’s economy starting to grow again.”