Towards interest reduction and participation of the formal sector

The negotiations for an agreement on debt restructuring and the new loan agreement will go on until the last minute of tonight's meeting of the Eurogroup in Brussels.

This is the estimation of the economy staff of Papademos’ government, with Evangelos Venizelos saying that "Greece is coming to today's crucial Eurogroup meeting having fulfilled all the conditions in order to get the approval for the new program, a key aspect of which is the PSI, within the framework of the European Council decision of October 26 and 27, 2011."

According to all indications and from what emerged in yesterday's meeting of the Euro Working Group, the debate on the special account through which Greece will serve its foreign debt, proceeded quite well since many problematic and impractical elements were removed, while the counter proposal prepared by the consultants of the Greek government seems to be considered to be the more realistic and functional one.

"The interesting thing is that on this crucial issue the IMF seemed consistent with the Greek side", Greek government sources said.

At the Euro Working Group our country was represented by the envoy of the Finance minister, Professor George Zanias and the Director of PDMA, P. Christodoulou, who were in continuous communication with Evangelos Venizelos.

The Greek side speaks of a "critical debate on the additional participation of the official sector (OSI) to achieve a GDP debt ratio close to 120% in 2020."

According to the same information, there seemed to be an agreement to reduce the rate of the original loan (GLF), and the PSI participation of the investment portfolios of the national central banks that hold Greek bonds. On the other hand, there is still a problem with the transfer of the ECB profits from the portfolio of Greek government bonds to Greece.

Lastly, the possibility of deeper private sector involvement in the PSI remains under discussion, namely through the management of accrued interest on the debt, and in direct contact with the IIF, the leadership of which is also in Brussels.

It is also likely that PM Lucas Papademos will meet with the IIF heads in Brussels.

As Finance minister Venizelos states, with this agreement the government expects "to close today a long period of uncertainty that did not benefit either Greece or the Eurozone economy as a whole. Europe knows how it is important to send clear messages with decisions that must be completed and with rules that are stable and do not change every so often." He expressed the view that everything will eventually be judged by the decision of 26/10 and with the principles underlying this European venture as the top criterion.