Doubts Grow over Greek Debt Restructuring

[marmar]

from Der Spiegel:



The outlook for cash-strapped Greece is looking increasingly bleak. Government reforms are behind target, and negotiations with private creditors over voluntary debt relief are stalled. A disorderly default could be just weeks away.

At least the backdrop to the heated exchange was glamorous. The venue for the mid-December conference, which was hosted by the US Chamber of Commerce, was the Hotel InterContinental in Athens. Poul Thomsen, wearing a purple tie, was standing on the floor of the ballroom. Thomsen, the International Monetary Fund's envoy for Greece, summarized the country's reform efforts to date in harsh terms. "Reforms are running behind schedule in most areas," he said. There was no longer even a pretense of hope. When Thomsen predicted that the economy would shrink in 2012, someone in the room shouted angrily: "Your troika is destroying us!"

Two years after the crisis began, the Greek tragedy is reaching a new climax. The economic data are distressing, the reforms are progressing very slowly, and now negotiations with private lenders on a voluntary writedown of Greek government bonds appear to be on the rocks.

The Greek economy was actually expected to shrink by only 3 percent in 2011. But according to current calculations the contraction was closer to 6 percent. Hopes that the economy will regain strength in 2012 will probably remain unfulfilled. Instead, it will most likely continue its downward slide -- for the fifth year in a row. It is becoming more and more apparent that without general debt relief that includes all groups of creditors, from private banks to the European Central Bank (ECB), Greece will hardly be able to free itself from its predicament. ................(more)

The complete piece is at: http://www.spiegel.de/international/europe/0,1518,807900,00.html

[dipsydoodle]

1. Greece debt: Merkel urges deal soon on second bailout

An agreement with Greek bondholders must come soon for Greece to receive a vital second bailout, Germany's Chancellor Angela Merkel says.

"The second Greek aid package, including this [debt] restructuring, must be in place quickly.

"Otherwise it won't be possible to pay out the next tranche for Greece," she told a news conference.

Greece needs a second EU-IMF rescue to avoid a default on its debts and possible exclusion from the eurozone.

http://www.bbc.co.uk/news/business-16466135