guardian.co.uk/business/2011 … -imf-talks
European Union talks on Greek debt as IMF flies in
Plans to buy back Greek debt at a discount ‘seriously considered’
The European Union is engaged in frantic behind the scenes talks to reduce Greece’s debt as international monitors fly into Athens this week. There is growing concern that the eurozone’s weakest state will be unable to end its worst crisis in decades, without a sovereign default.
Plans to buy back Greek debt at a discount – a scenario that economists call restructuring by stealth – are being given “urgent consideration,” bankers and EU officials say.
The three-stage scheme, which has dominated fringe debate at Davos, would allow the near-insolvent country to purchase Greek bonds owned by the European Central Bank at 75% of their nominal value by borrowing from the European Financial Stability Facility, the bloc’s rescue fund, at depressed market rates.
“There is a strong will to think about how the EFSF can be more robust,” Greece’s prime minister, George Papandreou, said at the World Economic Forum.
The arrangement, despite months of denials of a Greek write-off, was likened by the authoritative Sunday Vima newspaper to the Brady plan which rescued Latin America from bankruptcy in the 1980s.
If adopted, the paper said, the measures would “re-profile” about two thirds of the country’s total €330bn (£283bn) debt by the end of the year.
…(cont’d)
slasher
January 30, 2011, 11:33pm
#2
A little OT but explains why Greece is in a jock.
This beer entrepreneur can’t catch a break in Greece
nytimes.com/2011/01/30/business/30greek.html
thanks for that, good insight
Interesting moves afoot. Note, from FT (below), that what’s happens in Greece will inevitably apply to Ireland. Reduced interest rates, extended payment periods (or 30 years, perhaps) seem to be on the table now that it’s accepted that Greece (and Ireland) cannot service the debt even if it implements the IMF/EU deal in full.
European leaders are negotiating a “grand bargain” to tackle the continent’s debt crisis that would overhaul the eurozone’s €440bn rescue fund in exchange for tough austerity measures and closer oversight of debt-burdened member states.
Officials involved in the intensifying negotiations say the deal could also include a revamp of both the Irish and Greek bail-outs to extend the payment periods or cut the interest rates on their bail-out loans.
Some parts of the package remain highly controversial, and officials warned that a final deal may still be weeks away. No decisions are likely at Friday’s summit of European Union heads of government, but leaders hope to complete the package by the following summit, scheduled for late March.
ft.com/cms/s/0/a357f7e2-2c9e-11e0-83bd-00144feab49a.html#axzz1Cawwa4eR
Also interesting is that not much will happen at this week’s EU summit - the big stuff will come out in March. Good news for Enda Kenny who can pretend that this was all his doing (when it has little to do with what any Irish government wants).
