Greece opens bailout, debt swap talks

Mon Dec 12, 2011 6:47am EST
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By Lefteris Papadimas

ATHENS (Reuters) - Greece began a round of talks with the EU, the IMF and bankers on Monday, with negotiators facing a tight timetable to decide key aspects of a new bailout plan to pull the country out of its economic crisis.

Inspectors from the EU, the ECB and the IMF arrived at the finance ministry for talks that will also include checking on Athens' slow progress since a first rescue plan, agreed over a year ago in an effort to stem a crisis that has since dragged the whole euro zone into deep turmoil.

Finance Minister Evangelos Venizelos is then scheduled to meet the managing director of bank lobby IIF, Charles Dallara, at about 1200 GMT (7 a.m. EST) to try to make progress on a voluntary debt restructuring, an important component of the new 130-billion euro ($172 billion) bailout programme, a finance ministry official said.

Athens narrowly escaped bankruptcy this month after its EU partners and the International Monetary Fund agreed to release an 8-billion aid tranche despite weak revenues and slow reforms.

But it needs the new bailout plan -- with contributions from official lenders as well as banks -- to stay afloat next year and to face a major bond redemption in March. It must also wrap up the talks before general elections scheduled for February19.

"It would be desirable if the (debt restructuring or "PSI") talks starting today led to an initial agreement by the end of the week, otherwise we will be running short of time," a Greek banker told Reuters on condition of anonymity.

"If there is no initial deal by the end of the week, then it will be difficult to complete the PSI (private sector involvement) in January and it could delay the election."

Banks represented by the Institute of International Finance (IIF) agreed in October to write down the notional value of their Greek bond holdings by 50 percent in exchange for new paper.   Continued...