eurozone within touching distance of new greek deal
Last Updated : GMT 06:41:18
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Eurozone within touching distance of new Greek deal

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Arab Today, arab today Eurozone within touching distance of new Greek deal

Brussels - AFP

Eurozone finance ministers were locked in overnight talks early Tuesday closing in on a deal for a massive new bailout of Greece as they turned the screw on banks over a key write-down of Athens\' massive debt. After months of acrimonious debate, markets rose in anticipation of an agreement to greenlight a 230-billion-euro ($300 billion) financial lifeline, in exchange for strict surveillance of the government over coming years. That despite grinding negotiations with private creditors throughout the talks, focused on closing a 5.5-billion-euro gap before Germany and the Netherlands especially could put the package to their national parliaments. A report on Greece\'s debt sustainability drawn up by the European Union and the International Monetary Fund first discussed last week by ministers was leaked as the talks headed into overtime. This showed that in the worst-case scenario, Greece would need a whopping 245 billion euros in bailout aid by 2020, the Financial Times reported. Under \"the most optimistic scenario,\" it said that spending cuts imposed on Greece by backers could plunge Greece so deep towards depression that a new three-year bailout would fail to provoke growth. A senior eurozone official said that these figures were already \"factored in\" by ministers a week ago, but that they might have worn down private creditors led by Deutsche Bank chairman Josef Ackermann. Greece\'s Prime Minister Lucas Papademos and the chairman of the Eurogroup of currency area finance ministers, Jean-Claude Juncker, went in and out of the negotiations with private investors \"several times,\" officials said. Eurozone leaders had set in October a target of reducing Greek debt levels to 120 percent of gross domestic product (GDP) by 2020 under the bailout, down from around 160 percent at present. But a key negotiator told AFP last week that the 230-billion plan contained in that agreement would only bring total Greek debt down to 129 percent of GDP -- leaving a 5.5-billion-euro gap. After nearly 11 hours of negotiations in EU headquarters, a eurozone governmental source told AFP the nightmare scenario \"probably helped in the effort\" to bring the bailout package closer to achieving 120 percent of GDP in 2020. \"We\'re getting close I would say, the mood in the room is that we\'re working our way through it,\" he added. Sources said banks were readying to up their write-down by several percentage points. National eurozone central banks had earlier agreed to engage in their own write-down of Greek bonds. The mood had been one of determination all day. Greece, Germany, the IMF and Juncker, had each maintained that a deal was do-able -- Greek Finance Minister Evengelos Venizelos signalled \"a long period of uncertainty coming to a close.\" German counterpart Wolfgang Schaeuble pronounced himself \"confident\" while IMF chief Christine Lagarde also praised Athens\' \"great efforts\" to overhaul its economy. But Dutch Finance Minister Jan Kees De Jager demanded that the EU and the IMF take \"permanent\" control of decision-making over revenues and public expenditure in Greece. Officials said shortly before 3:00 am (0200 GMT) that this and other aspects of strict surveillance on the ground in Athens had been agreed. The Greek rescue plan agreed in October was structured as follows: a writedown of privately-held government debt worth 100 billion euros; a series of sweeteners for Greek banks, and guarantees in case private creditors do not take up the bond-swap offer to be launched on Wednesday in sufficient numbers; and loans eventually adding up to another 130 billion euros. Athens faces debt repayments of about 14.5 billion euros on March 20, otherwise it could be classed as bankrupt. Full delivery of the rest of the package, as well as IMF assistance, will be contingent on Greece enacting deeply unpopular spending cuts and reforms. Belgian Finance Minister Steven Vanackere warned this would be for \"years to come.\" Eurozone hardliners\' patience with Greece almost snapped over recent weeks with growing suggestions Athens could be cut adrift. Many euro partners see Greece as the victim of decades of chronic financial mismanagement by dynastic political forces -- what Italian Prime Minister Mario Monti last week called a \"perfect catalogue\" of errors. Ahead of a general election in April, the new bailout has been likened to the aid equivalent of a hospital drip after the failure of an initial 110-billion-euro EU-IMF rescue approved nearly two years ago. On top of 3.2 billion euros in the latest spending cuts, Greece has agreed in principle to open a blocked, or \"escrow\" account to ensure that aid for repayments to government creditors is set aside and not used for other purposes. In Asia, Hong Kong stocks rose slightly on Tuesday, as investors waited for news on the financial package.

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