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Euro-area finance chiefs may talk three times in the next two weeks as the 17-nation bloc grapples over ways to fill Greece’s financing gap and ease investor concerns that it might have to exit from the euro.
“It’s a possibility” that finance ministers will meet on Nov. 8, Guy Schuller, a spokesman for the Luxembourg government of Jean-Claude Juncker, who chairs euro finance meetings, said in a phone interview today. “But this won’t be certain until Nov. 6 at the earliest, because we don’t yet know when the troika report on Greece will be finalized.” That gathering would be in addition to a Greece-related conference call at 12:30 p.m. tomorrow and a Nov. 12 meeting scheduled in Brussels.
International Monetary Fund chief Christine Lagarde is due to meet with German Chancellor Angela Merkel in Berlin today as officials try to work out a plan that will cut Greek debt to 120 percent of gross domestic product by 2020 from about 144 percent now amid the worst recession in a generation. Failure to hit the debt target could see the IMF withdraw aid, sparking another wave of speculation about Greece’s future in the 17-nation euro.
“It’s yet another standoff between Athens and its creditors,” Nicholas Spiro of Spiro Sovereign Strategy in London said in an e-mail. “Berlin may not want to cut Greece loose, but neither is it prepared to fork out more money to keep it inside the euro zone.”
European stocks and the euro gained today, with the single currency rising 0.4 percent to $1.2955 as of 11:40 a.m. in Berlin. The Stoxx Europe 600 Index (SXXP) gained 0.6 percent.
European policy makers are preparing their opening gambits on Greece as the so-called troika of the European Commission, the European Central Bank and the IMF compiles its report Greece’s finances. The report will address progress made by Prime Minister Antonis Samaras’s government in meeting targets that are a prerequisite for Greece’s next instalment of a 130 billion-euro ($168 billion) rescue.
Merkel’s government, as the biggest country contributor to Greece’s two bailouts, signalled that it is willing to consider an ECB proposal for a buyback of Greek debt. Finance Minister Wolfgang Schaeuble, who cast doubt on the proposal earlier this month, said in a weekend radio interview that a buyback “is worth serious discussion.”
At the same time, German officials said Greece shouldn’t expect other euro-area nations to renegotiate the loans they’ve already given the country. A restructuring of Greek sovereign debt held by its public sector partners “is out of the question” for Germany and “not in Greece’s interests,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin yesterday.
“There is no consensus right now,” said Carsten Brzeski, a senior economist at ING Group in Brussels. “I still think that some kind of debt forgiveness will happen in the future but I don’t see it happening right now.”
German news magazine Der Spiegel reported in this week’s edition that the troika proposes a debt restructuring for Greece that would require public-sector lenders to take heavy losses. Greece already carried out the biggest write-off of privately held debt in history. An interim troika report was distributed to the German government last week, Schaeuble said.
Juncker said yesterday there won’t be any decisions taken during the Oct. 31 conference call, and that decisions are unlikely at the Nov. 8 meeting if it goes ahead. He tried to quash speculation that Greece might be forced out of the euro zone if its woes continue.
“The talk about an exit of Greece from the euro zone has to stop,” he said separately in a speech yesterday.
Merkel, the key political player during the crisis, said in August when Samaras visited Berlin that she was “deeply convinced” his government would “do what it takes to solve the problem in Greece.” She said her intention was to help Greece reach “the light at the end of the tunnel.”
Merkel and Lagarde are due to brief reporters in Berlin at about 6:30 p.m. together with the heads of the World Bank, the Organization for Economic Cooperation and Development, the World Trade Organization and the International Labor Organization.
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