GREECE MAY complete a debt-swap agreement with creditors soon, paving the way for more international financing needed to prevent economic collapse.
“We are close to an agreement on PSI [private-sector involvement] and I know it is doable”, finance minister Evangelos Venizelos said in a speech in Athens. “I believe this. And it is feasible if our partners respect the accord of October 26th and 27th.”
Greece’s debt is forecast to balloon to almost double the size of its shrinking economy next year without a write-off accord with investors, accordiong to the International Monetary Fund. The swap, part of a €130 billion second bailout agreement for Greece, is supposed to help reduce its debt to 120 per cent of gross domestic product by 2020.
The country’s €206 billion of privately held debt would be reduced by 50 per cent under an agreement at the recent summit of European leaders in Brussels.
The government and bondholders reached an initial agreement on some of the terms of a swap at meetings in Paris last week, website Euro2day.gr reported yesterday, without citing anyone.
Mr Venizelos said that negotiations on the new €130 billion bailout would begin on January 16th when a visiting troika of European and IMF officials return to Athens to thrash out the details of the new programme.
The finance minister also stressed that Greece had to quicken the pace of structural reforms to its taxation and economic system – something being demanded by the so-called troika – after months of delays. Those reforms will be efforts to crack down on chronic and widespread tax evasion.
According to some estimates, as much as €200 billion may be hidden in Swiss banks by wealthy Greeks who have been evading tax for decades.
Mr Venizelos said he was confident Greece would meet its 2011 fiscal targets.
“We can be close to the targets of the 2011 budget,” he said. “Income is difficult, but we have achieved good results from the new real estate tax and I’m confident we’ll meet the revenue target. While hard, Greeks are paying out of a sense of duty.”
He added that “deposits need to come back to Greece” and said he had set it as a priority.
“The banking system is fully guaranteed so there is no need to leave funds abroad,” he said.
– Bloomberg