Euro zone on track for decision on Greece on Nov 12

MEXICO CITY Tue Nov 6, 2012 6:21am IST

Related Topics

MEXICO CITY (Reuters) - - International lenders and Greece are on track to reach a deal to unfreeze emergency lending to Athens at a meeting of euro zone finance ministers on November 12, EU Economic and Monetary Affairs Commissioner Olli Rehn said on Monday.

Highly indebted Greece has fallen behind with reforms and fiscal consolidation demanded by the International Monetary Fund and euro zone countries in exchange for new loans, because of two rounds of elections and a deeper-than-expected recession.

Athens expects its debt to GDP ratio to reach almost 190 percent next year while euro zone and IMF officials believe it can only be sustainable if brought down to around 120 percent.

A senior EU official, speaking on condition of anonymity, cast doubt on Monday if a deal on Greece could be struck next week, because of there was no agreement yet on how to cut Greek debt. Even if there were agreement, several countries, including Germany, still had to discuss the matter with their parliaments.

But Rehn said a deal would be struck next Monday, when euro zone ministers, called the Eurogroup, meet in Brussels.

"We need to have a common view on how to reduce the debt burden by the November 12 Eurogroup meeting and I am confident that we will be able to reach that common view," Rehn told a news conference after a meeting of finance officials from the G20 countries.

Progress, however, depended on good will of Greece too.

"In parallel, or, in fact, prior to that, the Greek government is first expected to adopt a fiscal package of structural reforms and then the Greek parliament is asked to endorse this package as prior actions so we can proceed towards a decision next Monday," Rehn said.

"We are on track to take the decision on the 12th of November but it will require quite some work still from everybody including the Greek parliament, including the EU and IMF representatives," he said.

One of options to reduce the debt pile in Greece could be for Athens to borrow money from the euro zone and buy back its bonds at the deep discounts they now trade at.

Other possibilities include lower interest on existing loans, lengthening their maturities and grace periods of interest servicing as well as the European Central Bank foregoing profits it may make on the Greek bond portfolio it holds.

Asked if a debt buy-back was the preferred option, Rehn said:

"I would expect that we need a combination of elements and I would certainly not rule out the issue of a debt buy-back but it's still a bit premature to say anything definitely on this matter." (Reporting by Jan Strupczewski and Krista Hughes; Editing by M.D. Golan)

FILED UNDER:

Reuters Showcase

FMC-SEBI Merger

FMC-SEBI Merger

Regulatory shakeup could revive commodities markets   Full Article 

Market Eye

Market Eye

Sensex, Nifty end higher after bumpy budget-day trading  Full Article 

Tax Incentives

Tax Incentives

Budget woos foreign investors  Full Article 

Excise Duty

Excise Duty

Cigarette makers fall after budget hikes excise duty  Full Article 

Welcoming the Budget

Welcoming the Budget

India Inc cheers corporate tax cut, simpler rules  Full Article 

Gold Price

Gold Price

Gold prices to rise after budget keeps import duty high  Full Article 

Fuel Prices

Fuel Prices

IOC to raise diesel, petrol prices from Sunday  Full Article 

Moody's on Budget

Moody's on Budget

Budget "credit neutral" from a ratings perspective - Moody's   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage