Skip to content. | Skip to navigation

Personal tools
You are here: Home Breaking news Greece in 'tough' talks on eurozone bailout, debt rollover

Greece in 'tough' talks on eurozone bailout, debt rollover

— filed under: , , , ,

(ATHENS) - Greece was in "tough" talks with its global creditors and private bondholders on Monday on details of a new eurozone bailout to enable the country to ease its debt deadlines, the finance minister said.

Finance Minister Evangelos Venizelos said that the negotiations were "tough" and "critical" after meeting senior auditors from the eurozone, the European Central Bank and the International Monetary Fund.

"Standing upright as a country in the last 5.5 months has been a constant and agonised effort, a thriller," said Venizelos, who had earlier also held talks with a bank lobby group which has agreed in principle to take a big cut in debt repayments.

The talks are centred on a eurozone lifeline accorded to debt-ravaged Athens in late October which includes a 50-percent writedown on the country's short and medium-term debt in agreement with banks.

Greece faced bankruptcy within weeks last month owing to delays to reforms and political uncertainty which had held up application of the latest bailout.

The deadlock was broken only when a temporary unity government under former ECB deputy chief Lucas Papademos took over in November to ratify the bailout.

The EU and IMF auditors will be in Greece for a week, the finance ministry said.

Greek Labour Minister George Koutroumanis said the mission representatives from the eurozone, ECB and IMF, or so-called "troika", wanted to re-examine the private sector minimum wage to boost competitiveness, the semi-state ANA agency said.

But Koutroumanis, who had earlier briefed Prime Minister Lucas Papademos, said the creditors were "not currently" seeking to abolish holiday bonuses, a measure which the government has resisted for more than a year.

Greek reports said they were also expected to discuss a new tax code to be put to parliament by next month and a private sector pay freeze to cut operating costs.

Cuts to bonus pensions will also be on the agenda, the reports said.

The finance ministry declined to comment.

The head of an EU task force assisting Greece with structural reforms, Horst Reichenbach, is also arriving Monday for a three-day visit for meetings with Greek minister, the European Commission said.

In a report issued in mid-November, Reichenbach's team said it was reviewing Greek public administration changes "to ensure effective coordination" and was providing technical assistance to help implement the recovery plan.

The task force will also help Greece with a massive privatisation drive that has fallen greatly behind schedule.

The eurozone decided in October to accord Greece a new loan of 130 billion euros ($174 billion) of which 30 billion will be used to recapitalise banks sustaining losses to their books owing to the debt rollover.

An initial loan of 110 billion euros, spread over three years, was accorded to Athens in 2010. Greece has already received 73 billion euros of that money.

The aim of the latest deal is to wipe off 100 billion euros of Greek debt and to bring it down to 120 percent of Gross Domestic Product by 2020, from the current level of more than 160 percent.

The revised adjustment programme to be finalised by January will bind Greece for the next three years, Greek PM Papademos said last week.

The Greek state will pay advisory investment bankers Lazard 0.015 percent of the nominal value debt exchanged or regained under the rollover -- an expected maximum of 25 million euros -- in return for expert advice.

And international law firm Cleary, Gottlieb and Hamilton will be given at least six million euros in compensation for related advice, according to a finance ministry announcement picked up in Monday reports.

Athens was forced to seek EU-IMF bailouts last year after markets turned against it because of inaccurate deficit data and a massive, unsustainable debt mountain of more than 350 billion euros ($470 billion).

On Friday, European Union leaders banded together to back tighter budget policing in a desperate bid to save the eurozone which was spurned by Britain.

After years of foot-dragging on deepening integration, 26 of the 27 EU states signalled their willingness to join a "new fiscal compact" to resolve the crisis threatening to crack apart the monetary union.

But the deal came with a heavy political price when non-eurozone Britain resisted a Franco-German drive to enshrine new budget rules in a modified EU treaty.

The new deal, to be adopted by March through an intergovernmental agreement, was put to the entire 27-nation bloc in the interests of maintaining unity.

Document Actions