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Greece may face delays to 2nd deal
Source: Agencies |
February 16, 2012, Thursday
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EUROZONE finance officials are examining ways of delaying parts or even all of the second bailout program for Greece while still avoiding a disorderly default, several European Union sources said yesterday.
Delays may last until after the country holds elections in April, they said
While most of the elements of the package, which will total 130 billion euros (US$170 billion), are in place, eurozone finance ministers are not satisfied that Greece's political leaders are sufficiently committed to the deal, which requires Athens to make further spending cuts and introduce deeply unpopular labor reforms.
It is also not clear that Greece's debt-to-GDP ratio, which currently stands at around 160 percent, will be cut to 120 percent by 2020 via the agreement, as demanded by the 'troika' of the European Commission, IMF and European Central Bank.
"There are proposals to delay the Greek package or to split it, so that an immediate default is avoided, but not everything is committed to," one official briefed on preparations for a eurozone finance ministers call later yesterday said.
"They'll discuss the options," he said, adding: "There is pressure from several countries to hold off until there is a concrete commitment from Greece, which may not come until after they've held elections."
Germany, Finland and the Netherlands are pushing to delay the package, two other officials said, with Germany the most adamant and suggesting that final approval should only be granted after new elections are held.
Under the proposal, a debt swap deal between Greece and private sector holders of Greek bonds, which aims to cut Athens' debt burden by 100 billion euros via the private sector taking a nominal 50 percent loss, could go ahead in the coming weeks, with the process beginning in around a week's time.
If successfully completed, the swap would allow Greece to avoid missing a 14.5 billion euro bond redemption payment on March 20.
Delays may last until after the country holds elections in April, they said
While most of the elements of the package, which will total 130 billion euros (US$170 billion), are in place, eurozone finance ministers are not satisfied that Greece's political leaders are sufficiently committed to the deal, which requires Athens to make further spending cuts and introduce deeply unpopular labor reforms.
It is also not clear that Greece's debt-to-GDP ratio, which currently stands at around 160 percent, will be cut to 120 percent by 2020 via the agreement, as demanded by the 'troika' of the European Commission, IMF and European Central Bank.
"There are proposals to delay the Greek package or to split it, so that an immediate default is avoided, but not everything is committed to," one official briefed on preparations for a eurozone finance ministers call later yesterday said.
"They'll discuss the options," he said, adding: "There is pressure from several countries to hold off until there is a concrete commitment from Greece, which may not come until after they've held elections."
Germany, Finland and the Netherlands are pushing to delay the package, two other officials said, with Germany the most adamant and suggesting that final approval should only be granted after new elections are held.
Under the proposal, a debt swap deal between Greece and private sector holders of Greek bonds, which aims to cut Athens' debt burden by 100 billion euros via the private sector taking a nominal 50 percent loss, could go ahead in the coming weeks, with the process beginning in around a week's time.
If successfully completed, the swap would allow Greece to avoid missing a 14.5 billion euro bond redemption payment on March 20.
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