February 20, 2012
After months of tense negotiations, euro zone finance ministers worked deep into the night Monday to try to agree on a second giant bailout to bring Greece back from the brink of default, subject to strict conditions and in exchange for yet more severe austerity measures.
Under the bailout terms, Greece is supposed to reduce its debt to 120 percent of gross domestic product by 2020, from about 160 percent now. But the steady deterioration of the public finances in Athens have left the country’s creditors with problems in making the figures for Monday’s bailout add up, and the latest estimates suggest that figure would be closer to 129 percent. The talks in Brussels are trying to address how that financial gap will be addressed, to satisfy demands by the euro zone, the European Central Bank and the International Monetary Fund.
Representatives of private-sector banks that hold Greek bonds were resisting pressure to accept further losses. Other ways of making the numbers add up would be considered only when the negotiations with the private sector were close to completion, said one euro zone official not authorized to speak publicly. Alternatives include contributions from the European Central Bank to the reduction of Greek debt, or other measures such as reducing the interest rate Greece pays for bailout loans.
In advance of the meeting in Brussels, the French finance minister, François Baroin, said Monday that all the conditions were in place for a bailout of 130 billion euros, or $172 billion, which already require private investors to take steep losses on their holdings of Greek debt.
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