Greece in talks to ease debt burden: PM

Reuters News
Posted: Oct 12, 2011 10:49 AM
Greece in talks to ease debt burden: PM

ATHENS (Reuters) - Greece is in talks with its euro zone partners to ease its debt burden, Prime Minister George Papandreou said on Wednesday, adding that he hoped for bold solutions to tackle the debt crisis at G20 and EU council meetings.

Greece's second bailout package, which was agreed on July 21 and involved private sector bondholders, is under review with authorities considering increasing the losses that private creditors will incur, euro zone officials said.

"We are negotiating in every way to lighten this debt. This is the big negotiation and this is where the big problem lies," Papandreou told a cabinet meeting, without providing any details.

Papandreou told ministers the euro zone and the Group of 20 major economies need to provide persuasive and courageous responses to the debt crisis at summits later this month and in early November.

Euro zone leaders agreed in July to give Athens 109 billion euros ($149 billion) of new official financing, together with the International Monetary Fund, to cover its funding needs until mid-2014.

In addition, under a voluntary debt restructuring deal, private creditors would end up taking a loss -- a "haircut" -- of about 21 percent in the value of their Greek bond holdings, contributing an estimated 50 billion euros on a net basis through mid-2014.

But losses for private investors on Greek debt in the second financing package for Athens are now likely to be between 30 and 50 percent, rather than the earlier agreed 21 percent, euro zone officials said on Wednesday.

Papandreou, who will meet EU Council President Herman Van Rompuy in Brussels on Thursday, did not specifically refer to the "haircuts" in his speech. He said the July 21 decisions were still the benchmark on which decisions at an EU October 23 summit would be based.

"Let's hope these decisions will provide a definitive solution to the problems of the euro zone and the insecurity that has encircled Greece," he said.

($1 = 0.733 Euros)

(Reporting by George Georgiopoulos; Editing by Ingrid Melander; Editing by Ruth Pitchford)