LONDON (Reuters) - Greece should only receive more support if it complies with its existing agreements, ECB policymaker Jens Weidmann said on Thursday, adding that a relaxation of Greek targets would be “counter-productive” to restoring investor confidence.
The comments by Weidmann, head of Germany’s Bundesbank, will add to pressure on Greece, which is running out of time to agree a new bailout deal with its European partners.
“Greece will continue to need support, but support can only be given if the agreements made are complied with,” Weidmann, head of Germany’s Bundesbank, said in the text of a speech for delivery in London.
Although Greece’s debt ratio is high, the average maturity on its debt is quite long and the average interest rate quite low, he said.
“Hence, further debt relief would not really change Greece’s liquidity situation by much. But any further relaxation of the agreed targets would be counter-productive to efforts to regain investors’ confidence in Greece’s debt sustainability,” he said.
Turning to the ECB’s decision last month to begin printing money to buy government bonds - so-called quantitative easing (QE) - Weidmann said: “I do not expect QE to have no impact on inflation.”
“But the effects are difficult to gauge, and it can be assumed that they will be weaker than in the U.S., for example, because interest rates in the euro area today are already much lower than in the U.S., especially when the first QE programme was launched,” he said.
Writing by Paul Carrel; Editing by John O'Donnell and Susan Fenton