After 12 hours of talks, euro zone finance ministers, the International Monetary Fund officials and the European Central Bank ended their meeting with no rescue deal on Greece. “It is progress, but we have to do a little bit more,” said Christine Lagarde, the managing director of the International Monetary Fund, on her way out of the meeting.
“We are close to an agreement but technical verifications have to be undertaken, financial calculations have to be made and it’s really for technical reasons that at this hour of the day it was not possible to do it in a proper way and so we are interrupting the meeting and reconvening next Monday,” Eurogroup chairman Jean-Claude Juncker told reporters. “There are no major political disagreements,” he said.
Summary of Some Main Points:
Greece’s debt cannot be cut to 120 percent of GDP by 2020, was om with IMF, unless euro zone member states write off a portion of their loans.
The government’s debt is now expected to reach 144% of GDP in 2020.
Greek debt is now expected to peak at 190 per cent by 2014.
Greece will need more financing in the coming years—an estimated €33 billion.
Greece could be lent money to buy back about €60 billion in debt held by Greece’s private-sector creditors at a steep discount.
The European Central Bank, which holds about €40 billion of Greek bonds, could recycle all of the profits it makes when these bonds mature back to the Greek government.
Germany and several other EU nations, domestic law may forbid the government from lending more money to Greece if it has already booked losses on these loans.
The so-called troika representing creditors also has to certify that Greek Prime Minister Antonis Samaras’s coalition government has delivered economy-boosting steps ranging from improvements in tax collection to the deregulation of closed professions.
Greece is seeking a payment of €44bn, comprising €31.5bn of overdue loans and tranches of credit earmarked to it to the end of the year. They’ll meet again on November 26.
Greece debt burden has ballooned – glidepath to sustainability?