Arab Today, arab today eurozone seeks to secure greek debt writedown
Last Updated : GMT 12:02:44
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Eurozone seeks to secure Greek debt writedown

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Arab Today, arab today Eurozone seeks to secure Greek debt writedown

Brussels - AFP

Eurozone finance ministers scrambled on Monday to hammer out a massive debt writedown deal for Greece as Athens and its bank creditors struggled to find a compromise to avoid a messy default. Ministers meet on Monday to finalise a pact to toughen budget discipline across the eurozone while Athens and its private lenders seek common ground to erase 100 billion euros ($129 billion) from a 350 billion euro debt mountain. After weeks of hard bargaining, the chief negotiator for the Institute of International Finance (IIF), the group representing private lenders, said that banks had offered the maximum they were willing to lose in a bond swap deal. \"It was certainly the best offer that is consistent with the voluntary debt exchange,\" Charles Dallara told Greek broadcaster Antenna TV late Sunday after the two sides fell short of a hoped-for weekend agreement. He said the talks were at a \"crossroads\" but that he remains optimistic. A deal now rests with the European Union, International Monetary Fund and European Central Bank -- which have provided Athens with bailout funds and largely control its economic policy, Dallara added. \"It is largely in the hands of the official sector to choose a path, a voluntary debt exchange or a default,\" said Dallara, who left Athens on Saturday, leaving experts behind to continue talks in the Greek capital. Talks adjourned on Friday with both sides expressing optimism about the outcome. The disagreement has centred on the interest to be applied on the remaining debt after the writedown. A deal with private creditors is a pre-condition for Greece to get a new 130 billion euro bailout from its eurozone partners, a second rescue nearly two years after it was granted 110 billion euros in May 2010. The clock is ticking for Athens, which faces a March 20 deadline to repay 14.4 billion euros in debt. Back in Brussels, European Union finance ministers meet on Monday from 1330 GMT for two days of talks to iron out a new treaty in order to submit it for approval at a EU summit on January 30. The finance chiefs are holding their first meeting since Standard & Poor\'s stripped France and Austria of their triple-A ratings and downgraded seven other eurozone states earlier this month. Financial markets have been relatively calm despite the mass downgrade, giving the eurozone some breathing space in a year that the 17-nation single currency area is expected by many economists to plunge back into recession. \"We\'re not yet in the clear, but we have seen in recent weeks and during recent bond sales that the markets are slowly regaining confidence,\" German Finance Minister Wolfgang Schaeuble told German public television ARD. Germany, Europe\'s top economy, has insisted that ratification of the new budget pact become a condition for future aid to struggling nations. The pact\'s latest draft says only nations that sign up to the treaty will be eligible for aid under the eurozone\'s future, permanent bailout fund, the European Stability Mechanism (ESM). The ministers will try to hammer out other details of the pact, including how many nations must ratify it before it comes into force and whether the president of the EU Parliament and non-eurozone nations should be invited to euro summits. The ESM is due to begin operations in July and run in parallel with the European Financial Stability Facility (EFSF), a temporary instrument that was used to rescue Portugal and Ireland. The combined capacity of both funds is supposed to be capped at 500 billion euros, but several countries, the European Central Bank and the European Commission want it to be larger. Eurozone governments are divided over increasing the size of the fund. Italian Prime Minister Mario Monti, whose country is fighting to stay afloat, wants the fund to be doubled to one billion euros, according to the German news weekly Der Spiegel. When asked whether Germany should do more to help the eurozone, Schaeuble said \"the problems were not created in Germany.\" He added: \"We are doing more than all the other countries.\"  

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