Wrap debt, bailout deal by weekend

‘Discussions will continue in the coming days and the aim is to achieve a deal in parallel with the completion of consultations on Greece’s new economic programme’: Prime Minister Lucas Papademos

Greece aims to complete a debt writedown with private investors and an accord on a 130-billion euro (USD 171-billion) eurozone bailout by the end of the week, the Greek prime minister said yesterday.
“Discussions will continue in the coming days and the aim is to achieve a deal in parallel with the completion of consultations on Greece’s new economic programme,” Prime Minister Lucas Papademos told reporters after a European Union summit in Brussels.
Greece plans to conclude negotiations with the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF), which gave it loans in 2010 in return for reforms, “by the end of the week,” Papademos said.
On Monday, the EU piled pressure on Athens for a swift conclusion to the debt and bailout talks vital to the country’s economic survival, and to the well-being of the entire 17-nation eurozone.
Greece is trying to wrap up a deal with private investors – including banks, insurance companies and investment funds – who have been asked to take a 50 percent “haircut,” or discount, on the debt owed to them.
For Greece, agreeing on such a deal is a precondition for obtaining more bailout funds from eurozone governments and the IMF.
Under the Private Sector Involvement (PSI) deal, the creditors are asked to accept slicing in half the 200 billion euros in debt they hold. Talks have been snagged on the amount of interest to be paid on the remainder.
The ECB is also coming under growing pressure to accept losses on its holdings of Greek bonds, with an EU source adding that talks are progressing on a similar Official Sector Involvement (OSI).
This could see bond-swaps involving the ECB, national central banks from eurozone countries and other EU investments in Greek public debt that now need to be re-assessed.
Papademos yesterday said it was “difficult” to foresee if such a step would be necessary but that Greece was trying to avoid it.
“Our goal is to avoid further financial backing from official creditors,” the PM said.