Haircut pressure grows on ECB

Talks between Athens and its private creditors on the implementation of the private sector involvement plan (PSI+) resume on Thursday, with the government and the eurozone eyeing a deal by the end of the week and the International Monetary Fund asking for the participation of the European Central Bank in the haircut.

The head of the Institute of International Finance (IIF), Charles Dallara, will on Thursday meet with Prime Minister Lucas Papademos in an effort to seal a preliminary agreement for the technical conditions of a Greek debt swap. On Wednesday Dallara was in Paris and discussed the issue with the main lenders involved.

Government spokesman Pantelis Kapsis stated that Athens wishes to have “completed the negotiations for the debt swap program within this week,” adding that talks are at their most delicate point and that the course of PSI+ and the economic program for the 2013-15 period will determine the survival of the country.

On the other hand, the IIF stated on Wednesday that there remain several technical and legal issues before a deal can be reached. The main stumbling block is still the interest rate of the new bonds, but the proposal of the involvement of the ECB, too, is now firmly on the table, so as to cover the funding gap which has opened since the figures were compiled in October.

IMF Managing Director Christine Lagarde said the official sector has a key role to play. “The balance between the participation of the private and the public sector is a concerning question,” she said yesterday in Paris. “If the level of Greek debt held by the private sector is not sufficiently renegotiated, then public sector holders of Greek debt should also participate in the efforts.”

The European Commission responded through spokesman Amadeu Altafaj, who said that the European Union’s position on the participation of the official sector has not changed.

ECB officials told Kathimerini that there has been no shift in its policy on the issue, while a Bloomberg report suggested that any ECB involvement in the haircut would likely harm the lender’s credibility


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