January 26, 2012
Talks on a debt swap to avert a Greek default resume today as international policy makers squabble over the mounting cost of the rescue.
Charles Dallara and Jean Lemierre, negotiating on behalf of private creditors, return to Athens today after European finance ministers insisted bondholders take bigger losses on their Greek debt. The International Monetary Fund further roiled the discussions by suggesting that public holders of Greek bonds might also have to increase support.
The parties are groping for a solution three months after private bondholders agreed with European officials to implement a 50 percent cut in the face value of more than 200 billion euros ($262 billion) of debt by voluntarily swapping bonds for new securities. Since then, an economic contraction that exceeded estimates has made the goal of cutting Greece’s debt to 120 percent of gross domestic product by 2020 harder. An accord is tied to a second bailout for the country, which faces a 14.5 billion-euro bond payment on March 20.
“The cost of postponing a solution is extremely high for Europe, but especially for the future of the euro,” said Giovanni Bossi, chief executive officer of Banca Ifis SpA, an Italian financial-services company that doesn’t own Greek debt. “The parties are very close to a deal -- it’s time to close.”
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