Writing Off Greek Debt Would Destroy Eurozone - German Vice-Chancellor

The Eurozone will collapse if Greece's debts are written off unconditionally, since requests for the same treatment would immediately arise, Germany's Vice-chancellor and Minister of Economy and Energy Sigmar Gabriel said Thursday.

BERLIN (Sputnik) — Greece's overall debt stands at about $350 billion, of which $270 billion is owed to the European Central Bank, the International Monetary Fund and some eurozone countries.

"If the Eurozone starts writing off debts without conditions, I believe we will not help Greece which will make new debts the next day. Also, what would we say to the Spaniards, the Portuguese, Estonians, Finns? The eurozone would be destroyed," Gabriel said in the speech at the Technical University of Dresden, broadcast by the German TV station n24.

According to Gabriel, "we must find a compromise, but a compromise, probably, could be made in terms of reforms" which should address "to a large extent, the system of public administration."

Gabriel was referring to the social support reduction, including a tax increase on medicines proposed by the International Monetary Fund (IMF), as "totally anti-social measures."

According to Gabriel, Greek pension system and public services are inefficient, with some ten percent of Greece's GDP going to pensions, while in Germany pensions amount to three percent.

Earlier this week, IMF chief Christine Lagarde and US Treasury Secretary Jacob Lew said they consider it necessary for Greece's debt to be restructured.

On Sunday, over 61 percent of the Greek public voted "no" in a referendum on whether the country should accept creditor demands for spending cuts and tax increases in exchange for another loan, triggering renewed speculation about Greece’s possible exit from the eurozone.

Greece has until end of Thursday to submit a plan on reforms in the country to receive a new bailout package.