No guarantee Greek debt swap will go through

Reuters
December 16, 2011

There is no guarantee that talks on a voluntary private sector contribution to Greece's international bailout will succeed, a senior official from the "troika" of EU, IMF and ECB inspectors said on Friday.

Greece, now in its fourth year of a deep recession, is scrambling to put together a new bailout plan with the International Monetary Fund, the European Union and banks that involves a complex debt-cutting deal before major bond redemptions come due in the first quarter of next year.

Failure to secure a deal could force a disorderly default which might in turn trigger a wider emergency across the euro zone as it struggles with the escalating sovereign debt crisis.

Asked if there was a risk of a disorderly Greek default, the senior troika official said: "Our objective is still to have a voluntary operation. If you ask me: is there a guarantee that there will be a voluntary operation? Of course there can never be a guarantee."

A deal with investors who hold 206 billion euros of Greek bonds is key to slashing the country's debt mountain, the euro zone's biggest at 160 percent of gross domestic product.

"The ongoing discussions are constructive, they are useful, but at this point it is too early to say what will be the result," the official, who declined to be named, told Reuters as the team of inspectors wrapped up a one-week visit to Athens.

He said the EU, IMF and European Central Bank "troika" aimed to clinch a deal with Greece on the details of the new bailout during its next inspection visit in mid-January.

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