Greece will need more money than the 130 billion euros estimated in October once the agreement with private creditors is completed, the vice president of the European Commission, Olli Rehn, said on Thursday, thereby admitting for the first time the existence of a funding gap.
Meanwhile Charles Dallara, the head of the Institute of International Finance, returned to Athens yesterday and resumed talks on the private sector involvement plan (PSI+), discussing technical details in the afternoon at the Public Debt Management Agency (PDMA) and meeting with Prime Minister Lucas Papademos on Thursday night.
Both Rehn and Eurogroup President Jean-Claude Juncker implied that the European Central Bank would have to contribute in the effort to render the Greek debt sustainable, with Juncker admitting that Greece will need more than 10 years of support.
At the same time, Rehn and German Chancellor Angela Merkel argued that negotiations on PSI+ are close to a successful conclusion.
Rehn said, “We are quite close to reaching an agreement between private creditors and the Greek government and I would expect it to be completed in the next few days, preferably within January rather than in February,” while Merkel said that the talks “are on the right track.”
Asked whether the European Central Bank will be asked to fill the funding gap, Rehn responded that the coverage of the gap will depend on the decisions that “the official sector” - i.e. the eurozone member states - “and the European institutional organizations will make.”
A little later Juncker answered the same question, saying that “there is the issue of the involvement of the ECB in the reduction of the dent,” and warned that a Greek default should be avoided at all costs.
Deutsche Bank Chief Executive Officer Josef Ackermann appeared concerned with the conduct of the Greek negotiators, saying: “We need someone from the private sector who can really make a decision. We are close to the completion of negotiations and we are willing to cooperate. I believe it is in our interest to find a solution in the coming days.”