Greece Update: What Everyone is Waiting For
February 3, 2012 @ 9:40 AM EST
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Reuters is reporting that Eurogroup Chairman Juncker said Friday that there will be no meeting of Eurozone finance ministers on Monday; could be later in the week.
StreetAccount notes that there had been speculation that a meeting of Eurozone finance ministers tentatively scheduled for Monday could be postponed due to the absence of a deal on the debt swap with private bondholders, which, in turn effects the parallel negotiations surrounding the second bailout loan package.
Although a debt swap deal with private creditors is said to be largely done, it cannot be finalized without the terms of the EU/ECB/IMF bailout loan deal.
There is also the unresolved issue of what is being called the “official sector involvement” (meaning European banks and the ECB), as the IMF has been pushing for the ECB to take also take a loss on its € 40 billion in Greek debt holdings.
The argument here seems to be that (a) the private sector bondholders shouldn’t be the only group participating in what amounts to a bond restructuring and (b) reports indicate that even with private sector bondholders taking a 70% hit, Greece will still miss the target of a debt-to-GDP ratio of 120% by 2020. Thus, negotiators are looking to find more costs to cut.
However, Germany has been extremely vocal in its opposition to the plan for “official sector involvement” and apparently wants any shortfall to be made up by Greece in the form of additional spending cuts.
Recall also that there have not been any indications that the stalemate between Greece and the Troika over demands for a reduction in the minimum monthly wage, a 20-25% cut in supplementary pensions, the elimination of 150K public sector jobs by 2015, and bank recapitalizations, are easing.
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