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Little support for Greek debt write-off

Brussels - Eurozone finance ministers spoke out Monday against the idea of writing off Greek debt, hours after a new government advocating such a move was overwhelmingly elected in Greece.

"Writing off debt, in nominal value, I don't think there is a lot of support for that in the eurozone," Dutch Finance Minister Jeroen Dijsselbloem said before chairing a meeting in Brussels of the ministers' Eurogroup panel.

"I think a [debt] haircut, while being a populistic request, would not in truth yield much," Austrian Finance Minister Hans-Hoerg Schelling added. "You cannot now, just because a country like Greece has a problem, discuss a haircut for all of Europe."

"This is not the subject we will be discussing as a priority," EU Economy Commissioner Pierre Moscovici added.

Greece has since 2010 received €240bn in international bailouts - including from its European neighbours - to avoid bankruptcy. The bailouts have come with strings attached, in the form of painful and unpopular economic measures.

Forty-four percent of Greek public debt is now held by one of the eurozone's bailout funds, the European Financial Stability Facility, making it "by far the largest creditor of Greece," according to EFSF head Klaus Regling.

The European part of Greece's aid programmes is due to end in February. But the country's economic situation remains challenging, with its public debt the highest in Europe at around 175% of gross domestic product (GDP).

"The major problems in the Greek economy have not disappeared," Dijsselbloem noted. "There is still major work to be done."

The new Greek prime minister, far-left Syriza leader Alexis Tsipras, has vowed to renegotiate the bailout packages and obtain a writedown on debt from creditors.

But top European officials refused to say Monday what official stance they might take on such demands, saying that they first want the new government to spell out its wishes.

Dijsselbloem said he had spoken on the phone with the man he believes will be the next finance minister of Greece. Yannis Varoufakis has been tipped by the Greek media as the most likely candidate.

Dijsselbloem said the minister-in-waiting had expressed a "willingness to work with us very closely" and was adamant about the need to keep Greece in the eurozone.

"It was, in general terms, a good start," Dijsselbloem said. "We will support [the governing parties] in their quest for the economic recovery of Greece."

Finnish Prime Minister Alexander Stubb said his country - among the most fiscally conservative in Europe - was willing to discuss further extensions to Greece's bailout. But he also warned that it would "not accept a demand for debt cancellation."

Moscovici also played down the prospect of the unpopular bailout-enforcing troika of creditors being done away with.

Further debt restructuring may be an option for Greece, Irish Finance Minister Michael Noonan suggested. In the past, such moves have involved longer maturities and lower interest for existing debt.

But Regling noted that the average maturity for Greek loans already stands at a longer-than-usual 32 years, while Athens' interest-rate payments have already been deferred for 10 years.

The ministers above all underlined the need for the new government to stick to commitments previously made by Athens.

"On that basis we will support them where we can," Dijsselbloem said.

"Nobody is forcing anything on Greece, but the commitments prevail," German Finance Minister Wolfgang Schaeuble added.

Greece is facing "important challenges" that "will always require reforms," Moscovici noted.

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