The EU’s euro commissioner Olli Rehn said Monday he was optimistic that negotiations with banks on a massive write-down of Greek government debt could be wrapped up, “preferably” this week.
“I am confident that we can conclude negotiations on the PSI shortly, preferably in the course of this week,” Rehn said on arrival for talks among eurozone finance ministers set to focus on difficult negotiations in Athens on so-called Private-Sector Involvement.
Greece and its private lenders are seeking common ground to erase 100 billion euros ($129 billion) from a 350-billion-euro debt mountain.
But as talks continue in Athens, Charles Dallara, the chief negotiator for the Institute of International Finance (IIF), the group representing private lenders, said that banks had offered the “maximum” they were willing to lose in a “voluntary” bond-swap deal.
It is “largely in the hands of the official sector to choose the path,” added Dallara, “a voluntary debt exchange or a default.”
An uncoordinated default could trigger payouts on insurance policies bought up by the likes of big hedge fund investors, blamed in large part by EU diplomats for pressuring the talks in Athens.
Rehn said that ministers would be “taking stock” during Monday’s Brussels session of the turn in events, but stressed that the EU was still working on the basis of “very solid decisions” taken by national leaders in October.
A deal with private creditors is a pre-condition for Greece to get a new 130 billion euro bailout from eurozone partners, a second rescue nearly two years after it was granted 110 billion euros in May 2010.
The clock is ticking for Athens, which faces a March 20 deadline to repay 14.4 billion euros in debt.
With two EU summits to come before then — on January 30 and March 1-2 — Belgian Finance Minister Steven Vanackere said eurozone partners “should not fix a deadline which could only lead to disappointment.”
But he stressed that “there is no alternative to a deal.”
Dutch counterpart Jan Kees de Jager underlined that “a sustainable debt level is the precondition for countries and the IMF to continue the support” for a Greek bailout.
Luxembourg’s Luc Frieden also said it was “very important that we realize that solidarity is linked to strict conditions,” adding that the Greek government had not always lived up to its end of different bargains in the past.