Debt cut: talks with athens come to nothing

debt cut: talks with athens come to nothing

According to greek finance minister evangelos venizelos told greek state television (NET), they are scheduled to meet next wednesday (18. January) to be continued in athens. Venizelos commented on the language only as "useful". Venizelos, greek prime minister lucas papademos and IFF chief charles dallara are primarily involved in the talks.

The day before, the IIF had said there were still "unresolved core issues" and time was running out. Exactly what the sticking points are has not been made public. According to information from greek sources, however, the issue is the interest rate of the new bonds that are to replace the old bonds after the debt cut of 50 percent, as well as guarantees that there will be no new debt cut.

In addition, it is being negotiated which law should apply in the event of possible legal entanglements. The banks want the stricter british law to apply in this case, not greek law, and disputes to be negotiated in the united kingdom, it said.

The debt restructuring is seen as a decisive building block for the second, 130 billion euro aid program for greece. It is also a prerequisite for the disbursement of further aid loans. Experts from the EU, the international monetary fund (IMF) and the european central bank (ECB) are also expected in athens at the beginning of next week to review athens’ progress.

Even after an agreement with the IIF, athens’ situation remains dramatic. Greece’s private creditors, banks and other financial firms, then had up to six weeks to declare whether they would participate in the debt waiver. Various banks and hedge funds are straining according to experts. They are relying either on full payment of the greek debt or on default insurance and refused to participate in the debt cut.

For this reason, the desired "voluntary" cut could not achieve the debt reduction target of 100 billion euros. Then additional aid was needed for athens. Debt cut aims to print debt mountain from 160 percent to 120 percent of gross domestic product (gdp).

On sunday, german federal minister guido westerwelle is also expected in athens for a short working visit. The focus will be on the serious financial crisis, the greek ministry of finance said in athens.

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