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Greece hosts creditors for bailout talks 

Economy | 12.12.2011

The Greek government has welcomed international auditors to Athens as crunch talks resume over a second financial lifeline, after austerity measures were passed by parliament.

Greece has launched a fresh round of bailout talks with international inspectors in an effort to secure a second rescue loan package agreed to several weeks ago, but which has not yet been finalized.

 Finance Minister Evangelos Venizelos met representatives of the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) - collectively known as the "troika" - in Athens on Monday to negotiate further details of the deal, which is crucial to easing Greece's crushing debt burden.

"We begin this week in Athens with the troika two very important procedures to put into place a new loan decided in Brussels," said Venizelos.

An important component of the talks are the conditions for a write-off of Greek debt by 100 billion euros ($134 billion). Representatives of private investors, who will be asked to share part of the losses caused by the debt waiver, were set to attend talks, according to the news agency Reuters. 

Greece has only been able to avoid defaulting on its loans because of loans from the troika. The aim is for Greece to reduce its debt to 120 percent of gross domestic product by 2020. The current level stands at more than 160 percent.

Venizelos warned of "a hard battle ahead" under "very difficult conditions in Europe and the world."

An initial loan of 110 billion euros, spread over three years, was agreed by the troika for Athens in 2010. So far, Greece has received 73 billion euros of that money. The new loan package, of 130 billion euros, was agreed in October. Of this amount, 30 billion euros is to be used to recapitalize banks.

Tough domestic budget agreed

Last week, lawmakers in Greece passed a budget for 2012 committing Athens to tough fiscal goals to address the country's debt mountain of 350 billion euros.

Extra income is to be raised through an overhaul of the tax system, a reduction of tax breaks and minimum income thresholds. Reforms were also planned to the health and social security sectors, with a delayed asset sale set to proceed "at a faster pace."

The budget was agreed by the country's new caretaker government, led by former European Central Bank deputy chief Lucas Papademos, who replaced beleaguered predecessor George Papandreou last month.

On Friday, 26 out of 27 European Union leaders - Britain being the exception - appeared to back tighter budget policing in a desperate bid to save the eurozone by agreeing in principle to a new "fiscal compact."

Author: Richard Connor, Gregg Benzow (AFP, Reuters)
Editor: Martin Kuebler