Greece’s “Last Minute” Incomplete Deal

Greek Finance Minister Evangelos Venizelos is in Brussels today. He brings an incomplete deal on austerity measures to Euro zone finance ministers, and they must decide whether Greece has already done enough to receive a bailout package needed to prevent the country default. Venizelos said he hoped they would make a positive decision. “A Greek default will not be on the agenda of today’s emergency finance ministers’ meeting, which starts at 6 p.m. in Brussels”, said a euro zone official.

A Greek final agreement on austerity program has been delayed for a week as lenders demand Greek government to sign off to measures ranging from a reduction in the minimum wage and lower pensions, to immediate job cuts for as many as 15,000 state employees. Yesterday, the Greek leaders have effectively agreed on all the issues except for that of cuts to pensions. Officials from the European Union and the International Monetary Fund gave Greece 15 more days to identify measures totalling 300 million euros.

Greece faces a 14.5 billion-euro bond payment on March 20 and is struggling to secure financing to avert a collapse of the economy that could spark a new round of contagion in the euro area. If the country doesn’t have the money in the account at the time the payment is due, then it goes into default.

A formal offer for the debt swap must be made by Feb. 13 to allow all procedures to be completed before the March 20 bond comes due. Meanwhile, The Institute of International Finance is holding a meeting to go over technical matters so that if a consensus between Greece and the troika is reached, the debt swap could be implemented quickly.

Source: Bloomberg

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