Wall Street Journal
February 2, 2012
A long-awaited agreement to restructure more than €200 billion ($262 billion) of Greek government bonds in private hands is being held up in large part by big differences between two of Greece's official creditors: the International Monetary Fund and Germany.
Several people close to the negotiations say a deal between Greece and private bondholders could be concluded in hours, as only small differences remain between the two sides. But the rift between the IMF and Germany—on top of a desire among all official creditors to secure a solid commitment from Greek politicians across the political spectrum to big changes in the economy's structure—has delayed final completion of the accord.
The gap between Germany and the IMF, central players in the decision on a new bailout for Greece, reveals a fundamental divergence in their approach to reducing Greece's huge debt burden.
The IMF has argued, increasingly vociferously, that cutting the face value of the €200 billion of Greece's debt in private hands won't be enough to reduce the government's debt to the official target of 120% of gross domestic product by 2020—a goal many analysts consider not ambitious enough.
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