ATHENS, Greece (AP) — The Greek government will hold a second day of talks Friday with representatives of private bondholders on a crucial debt relief deal, without which it could suffer a catastrophic bankruptcy that would send shockwaves through the global economy.
The country is rushing to reach a deal on a bond swap that reduce its public debt by euro100 billion ($127 billion) — roughly half its privately held debt burden — ahead of a visit Monday by international inspectors monitoring its austerity program.
The private debt deal is a key part of Greece's second international bailout, worth a total euro130 billion ($166 billion), which tops the initial euro110 billion program agreed in May 2010 to keep the country solvent after its borrowing costs soared to unreachable heights.
Fellow eurozone members Ireland and Portugal have also been forced to take international bailouts, with the threat of contagion rattling Europe's economy and battering the euro.
Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos will be meeting Charles Dallara and Jean Lemierre of the Institute of International Finance on Friday.
After a first round of talks Thursday, a senior Greek official said a deal could be struck by the end of next week, with a formal public offer coming at the beginning of February.
"We are completely on track, exploiting the momentum," the official said, on condition of anonymity because of the sensitivity of the talks.
An IIF statement said "a range of issues were discussed and some key areas remain unresolved," and stressed that "time for reaching an agreement is running short."
Frederic Oudea, the CEO of French bank Societe Generale, which holds a substantial amount of Greek debt, said the negotiations could finish in the next few days and private creditors might end up accepting losses even larger than the target of 50 percent.
"But we have to be careful to maintain a balance because even if governments are saying that Greece will be a unique case, it will be instructive to investors," Oudea said in an interview with Les Echos newspaper. "It could become a 'cautionary tale' that could weigh on other countries."
The two-year-old Greek debt crisis, which followed revelations that Athens had been underreporting key data on its bloated budget deficit and public debt, has shaken the eurozone and roiled financial markets.
On Friday's Greece's foreign ministry said German Foreign Minister Guido Westerwelle will visit Athens Sunday for talks with Foreign Minister Stavros Dimas. Westerwelle is also expected to meet with Papademos.
Germany is a key contributor to Greece's rescue loan program.
Athens will only continue to receive the loans if it satisfies inspectors from the European Union, the European Central Bank and the International Monetary Fund that its austerity program is working.
But the 2011 budget deficit is expected to overshoot targets, while the pace of promised reforms remains sluggish. The inspectors, collectively known as the troika, are expected to arrive in Athens next Tuesday.
Over the past two years, Greece has slashed pensions and salaries while repeatedly hiking taxes, in a deeply unpopular program that has sparked a string of general strikes and often violent protests.
Last week, Papademos urged unions to accept further income losses, warning that bankruptcy and an ignominious exit from the euro could otherwise follow.
yahoo.com
The country is rushing to reach a deal on a bond swap that reduce its public debt by euro100 billion ($127 billion) — roughly half its privately held debt burden — ahead of a visit Monday by international inspectors monitoring its austerity program.
The private debt deal is a key part of Greece's second international bailout, worth a total euro130 billion ($166 billion), which tops the initial euro110 billion program agreed in May 2010 to keep the country solvent after its borrowing costs soared to unreachable heights.
Fellow eurozone members Ireland and Portugal have also been forced to take international bailouts, with the threat of contagion rattling Europe's economy and battering the euro.
Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos will be meeting Charles Dallara and Jean Lemierre of the Institute of International Finance on Friday.
After a first round of talks Thursday, a senior Greek official said a deal could be struck by the end of next week, with a formal public offer coming at the beginning of February.
"We are completely on track, exploiting the momentum," the official said, on condition of anonymity because of the sensitivity of the talks.
An IIF statement said "a range of issues were discussed and some key areas remain unresolved," and stressed that "time for reaching an agreement is running short."
Frederic Oudea, the CEO of French bank Societe Generale, which holds a substantial amount of Greek debt, said the negotiations could finish in the next few days and private creditors might end up accepting losses even larger than the target of 50 percent.
"But we have to be careful to maintain a balance because even if governments are saying that Greece will be a unique case, it will be instructive to investors," Oudea said in an interview with Les Echos newspaper. "It could become a 'cautionary tale' that could weigh on other countries."
The two-year-old Greek debt crisis, which followed revelations that Athens had been underreporting key data on its bloated budget deficit and public debt, has shaken the eurozone and roiled financial markets.
On Friday's Greece's foreign ministry said German Foreign Minister Guido Westerwelle will visit Athens Sunday for talks with Foreign Minister Stavros Dimas. Westerwelle is also expected to meet with Papademos.
Germany is a key contributor to Greece's rescue loan program.
Athens will only continue to receive the loans if it satisfies inspectors from the European Union, the European Central Bank and the International Monetary Fund that its austerity program is working.
But the 2011 budget deficit is expected to overshoot targets, while the pace of promised reforms remains sluggish. The inspectors, collectively known as the troika, are expected to arrive in Athens next Tuesday.
Over the past two years, Greece has slashed pensions and salaries while repeatedly hiking taxes, in a deeply unpopular program that has sparked a string of general strikes and often violent protests.
Last week, Papademos urged unions to accept further income losses, warning that bankruptcy and an ignominious exit from the euro could otherwise follow.
yahoo.com
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