Greece has already missed the deadline for completing negotiations with private investors for the granting of the second package of financial assistance from the EU and IMF, and Athens urgently needs to make decisions, warned Amadeu Altafaj, spokesman for European Commissioner for Economic and Financial Affairs, Olli Rehn. “The deadline already passed for reaching an agreement on private sector involvement to reduce Greece’s debt burden”, said the European official.
In March Greece must make payments of 14.4 billion euros, and without the assistance of the EU and IMF Athens will fail to pay the debt and expected to be in default. The success of these negotiations, known as PSI (Private Sector Involvement), depends on a second aid plan of the euro area for Greece, worth 130 billion euros. International Monetary Fund and Greece say that the agreement reached in late October by the eurozone leaders should not only be maintained, but should be tightened, while bondholders and ECB officials have proposed giving up this idea.
Those who oppose the plan that requires all private creditors to erase 50% of the value of Greek bond that they have, argued that the precedent set by involving the private sector, even though voluntary, has profoundly affected the markets, who fear that other countries, such as Italy, may apply this scheme. Together with new loans and other measures, Greece’s debt would return to 120% of GDP by 2020 from the peak of 142% of GDP in 2013. Starting January 2012, banks will change the Greek bonds they hold with other bonds with the value reduced by half. This means the deletion of 100 billion euros from Greece’s debt, currently at 350 billion euros.
A group of Greek lawmakers have demanded compensation from Germany worth 54 billion euros for the Nazi occupation and Greek collaborationist government loans, during the Second World War. The proposal was sent to the Greek Minister of Justice to make a legal assessment of the application.
