Greece in final lap for debt writedown, loan deal
John Hadoulis
Greece on Thursday entered the final stretch of talks on a debt writedown and a new loan key to its economic survival, the government said, as the IMF held out hope for additional funding.
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Yahoo News
Greece on Thursday entered the final stretch of talks on a debt writedown and a new loan key to its economic survival, the government said, as the IMF held out hope for additional funding. "Now is the critical moment for the final battle" on talks with private creditors and a new eurozone bailout, Finance Minister Evangelos Venizelos said as officials held a new round of talks with a global bank lobby group. The Institute of International Finance (IIF), which is representing the banks and financial institutions, said the talks were positive. "Progress was made and discussions will continue tomorrow," it said. "(We) held productive discussions today in Athens with Prime Minister Lucas Papademos and Deputy Prime Minister and Finance Minister Evangelos Venizelos on the voluntary PSI for Greece," the IIF said. Under the so-called private-sector initiative (PSI), banks and other financial institutions are expected to take at least a 50 percent "haircut" on their Greek debt, which would remove about 100 billion euros ($129 billion) from Athens's massive debt burden of more than 350 billion euros. The IIF was represented by managing director Charles Dallara and Jean Lemierre, adviser to French bank BNP Paribas. With Greece also scheduled to begin tough negotiations with its EU-IMF creditors on a new rescue package, the Washington lender said it was ready for talks on extra rescue funds needed to keep Athens from defaulting in March. "The Greek authorities have requested to begin discussions on a new arrangement with the Fund," International Monetary Fund spokeswoman Conny Lotze said in an email to AFP. "The arrangement would require exceptional access under the Fundâs lending rules," she said. The three political parties backing Greece's coalition government were summoned earlier to an emergency meeting at which they confirmed their support, said Papademos. "The talks were held in a very positive climate, the political leaders confirmed their full support in the government to complete its task," the prime minister said in a brief televised address. The government is offering new bonds with an interest rate of around 3.5 percent to be swapped for maturing debt, while the IIF is seeking a minimum rate of four percent, Greek reports said. The main Athex index closed 2.94 percent higher amid media reports that Greek officials were optimistic they would finally strike an agreement with banks and institutional investors. This in turn would open the way for a separate 130-billion-euro loan deal with the eurozone and help calm market fears of a wider crisis within the 17-nation single currency area. Meetings begin on Friday with senior representatives from the European Union, the IMF and the European Central Bank -- known locally as the 'troika' -- on the next three years of an economic blueprint adopted by Greece in return for this money, and an earlier loan in May 2010. "We are in a truly difficult phase of negotiations with the troika," government spokesman Pantelis Kapsis told Real FM radio. "It is a three-year programme that will safeguard growth for the Greek economy, so that it can meet its obligations after the debt haircut. We are seeking the best policy mix for the next three years," Kapsis said. A successful conclusion of the debt swap and the new loan would also allow Greece to start planning elections to replace its current caretaker government, with early elections expected in April. Venizelos said Greece had until January 30, and a scheduled EU summit, to clinch agreement on both fronts. "By next Monday, at the (EU) summit, we must have a final framework for the new (loan) programme, not just for the PSI," he said. The finance minister said Greece wanted a "radical and generous" debt cut of a voluntary nature, but noted that all bondholders had to participate for the operation to produce a 50-percent writedown. "It must be of a voluntary nature, and lead to complete participation, namely 100 percent participation," the minister said. Hedge funds holding Greek debt have resisted the writedown. Greece has warned it could take action on holdouts, a move that may trigger claims by creditors for default compensation from Athens.