Greece's lenders inch closer to debt viability agreement
Published 23/11/2012 | 11:25
INTERNATIONAL lenders have agreed new steps to cut Greece's debt pile further but it still has to fill a €10bn gap to gain the IMF's approval for its next tranche of aid, a senior Greek government official said on Friday.
The International Monetary Fund has agreed to deem the country's debt viable if it falls to 124pc of GDP in 2020, giving ground on its earlier target of 120pc, the official said on condition of anonymity.
"The euro group has already agreed on measures to reduce Greek debt to 130pc of GDP in 2020, so that leaves a gap of 5-6 percentage points of GDP to be covered -- about €10bn," he added.
The official did not disclose what measures had been identified that would reduce the lenders estimate of public debt in 2020 from a previous 144pc of GDP.
Another senior source involved in the negotiations confirmed that the IMF would now accept 124pc as a target but said that to say the remaining gap only amounted to €10bn was much too optimistic.
According to current government projections, Greek debt is seen at €340.6bn, or 175.6pc of GDP at the end of 2012.
It is expected to peak at €357.7bn, almost 191pc, in 2015.
Greece's international lenders failed earlier this week to agree how to get the country's debt down to a sustainable level and will have a third go at resolving their most intractable problem on Monday.
According to a document circulated at that meeting, Greece's debt cannot be cut to 120pc of GDP by 2020, unless euro zone member states write off a portion of their loans to Greece, which Germany has consistently said would be illegal.
The document prepared for the meeting of euro zone finance ministers and seen by Reuters spelled out several options, including using about 10 billion euros to buy back bonds at between 30 and 35 cents in the euro.
There are also proposals to reduce the interest rate on loans already extended by euro zone countries to Greece, to impose a moratorium on interest payments and lengthen the maturities on loans, all of which would cut the debt burden.