Greece: European Central Bank, other central banks must be part of debt relief deal



ATHENS, Greece — The European Central Bank and national central banks should be part of a debt relief deal with near-bankrupt Greece’s private sector creditors ahead of a pressing deadline early next week, the Greek Finance Minister said Thursday.

Evangelos Venizelos said the deal should also involve reducing the interest rates Greece pays its European partners and the International Monetary Fund for its first bailout agreed in May 2010.


Venizelos told a meeting of Socialist party deputies that Greece’s target of reducing its crushing debt to sustainable levels by 2020 “requires the completion of a parallel Official Sector Involvement” — beyond the €100 billion writedown all but concluded with private bondholders.

He added: “That means that the European Central Bank must be mobilized, that we must solve issues concerning national central banks, and we must resolve issues concerning the level of the interest rate” of the first, €110 billion ($144 billion) bailout that has been shielding Greece from bankruptcy for the past 20 months.

A European Union official said Greece needs about an extra €15 billion ($20 billion) to get its debt down to manageable levels, and the rest of the eurozone could have to make up the shortfall. The official spoke on condition of anonymity because of the sensitivity of the matter.

German Finance Minister Wolfgang Schaeuble said on n-tv television Thursday that he didn’t see the need for “any extra contributions from the public sector; we’re carrying everything anyway.” He didn’t address the issue of the €15 billion funding gap.

Athens is locked in tough talks on two fronts to ensure that it remains solvent, dodging the very real threat of a disorderly default — which could likely be followed by a Greek exit from the eurozone — when a big bond issue matures late next month.

On the one hand are the negotiations with banks, pension funds, hedge funds and other owners of devalued Greek government bonds, known as Private Sector Involvement. But the country’s coalition government also has to placate its European partners and the IMF that are urging deeper austerity cuts to release rescue loans from a second package agreed last year — but not yet finalized.

“There were ups and downs in the PSI talks because we, in reality, we’ve been forced to take part in a double negotiation,” Venizelos said.