Weekend talks stall
24/01/2012
Over the weekend a team of negotiators flew out to Athens for talks over plans to wipe out up to 70% of Greece's debts. The country will default on its debt on 20 March unless a deal can be done to secure a fresh debt agreement. However, the Institute of International Finance (IIF), a trade body representing banks owed €47 billion by Greece, left the talks on Saturday morning, with hopes of a quick settlement fading. It had been hoped that an announcement would be made ahead of this week's meeting between finance ministers, as the debt restructure is a key condition for a new rescue package from the European Union and the International Monetary Fund. The proposal on the table would see maturing debt exchanged for new bonds that will be paid back over the next 30 years. The interest rate charged would be lower in the short term to ease pressure on Greece's budget deficit, and then increase to average around 4%. It had been thought that agreement was close, and indeed markets are viewing it that way however, there have been repeated warnings by those involved that it will take weeks to draw up legal paperwork, though there is an expectation that Greece will be allowed a temporary settlement on the €14.5 billion maturing on 20 March.
