Monday, January 23, 2012

Germany, France press for Greek debt deal

Germany and France pressed today for a rapid deal between Greece and its private creditors that returns its soaring debt to sustainable levels and said they remained committed to a new bailout that is needed by March to avert a disastrous default.

Euro zone finance ministers are due to decide later today what terms of a Greek debt restructuring they are ready to accept as part of a second rescue for Athens.

Ahead of that meeting, French Finance Minister Francois Baroin said an elusive deal to convince the banks and investment funds that own Greek debt to accept deep losses on their holdings appeared to be "taking shape."

But his German counterpart Wolfgang Schaeuble warned that any deal must help Greece cut its debt mountain to "not much more than 120 percent of GDP" by the end of the decade, from roughly 160 percent today, something many economists believe will not be achieved by the existing plan.

"The negotiations will be difficult, but we want the second program for Greece to be implemented in March so that the second tranche can be released," Schaeuble told a news conference in Paris with Baroin and the heads of the German and French central banks.

"Greece must fulfill its commitments, it is difficult and there is already a lot of delay," Schaeuble said.

In Brussels, European Economic and Monetary Affairs Commissioner Olli Rehn said talks had been "moving well" and expressed confidence a deal could be sealed this week.

But German Chancellor Angela Merkel said there was no question of extending Greece a bridging loan if talks with the private sector dragged on further.