Europe's financial mandarins are hashing out another a bailout package for Greece this week, and once again the question is, who's going to pay for it? Since no one seems to want the inevitable—a significant write-down of the value of Greek debt—the International Monetary Fund and EU member states will likely cough up more money. Athens will be expected to contribute too, but how the Greeks do it matters as much as the amount they raise.
assessment caps a week when Greece’s fiscal crisis worsened enough for Moody’s Investors Service to raise the probability of a default to 50 percent. Greek Prime Minister George Papandreou will discuss the findings at 3 p.m. on a visit to his Luxembourg counterpart Jean-Claude Juncker, who leads the group of euro-area finance ministers.
“The medium-term plan is largely completed and some technical details remain,” George Petalotis, Papandreou’s spokesman, said yesterday. “There were no major hiccups.”
Papandreou is promising 6.4 billion euros of spending cuts this year, another 22 billion euros up to 2015, and 50 billion euros in sales of assets including Hellenic Telecommunications Organization SA (HTO) and Public Power Corp SA. The pledges are key to securing a fifth payment of loans under last year’s 110 billion- euro EU-led rescue as well as more financing over the next two years as borrowing costs lock Greece out of markets.
Moody’s downgraded Greece to Caa1, on a par with Cuba, and raised the nation’s risk of default on June 1 after policy makers considered asking investors to reinvest in new Greek debt when existing bonds mature. The move prompted Greek 10-year bonds to fall to the lowest since January.
Another source close to the talks said the statement would focus exclusively on whether Greece is meeting fiscal and privatisation targets under the current 110 billion euro bailout agreed in May last year.
"It will be about the fourth review (of Greece's progress in meeting its bailout targets), while anything that could follow concerning a possible additional programme is for the days to come," the source said.
"These questions are more political and will be dealt with at the level of finance ministers and advisers," the source said, adding that Greece's international lenders hoped to conclude these talks this month.
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