Greek debt forgiveness talks to restart soon, EU commission says

Jan 16, 2012, 12:16 GMT

Brussels - Greece's talks with private banks over partial forgiveness of its debt are to be restarted soon, the European Union's executive said on Monday.

'We understand that talks will resume soon,' European Commission Olivier Bailly told reporters in Brussels.

Eurozone leaders are insisting that banks voluntarily take a 50-per-cent nominal loss - or 'haircut' - worth 100 billion euros (126.7-billion-dollars) as a prerequisite to them approving a second 130-billion-euro bailout package for Greece.

But on Friday the Institute of International Finance (IIF), the banks' lobby group, said negotiations with authorities in Athens had been 'paused.'

Eurozone finance ministers want a deal to be struck by end of January. Greece is facing default in March, when 14.4 billion euros of its debt is maturing, unless it can secure fresh bailout money.

Bailly ruled out the possibility of eurozone governments shelling out more money than agreed in October to make up for any shortfall in debt forgiveness from banks.

'We have no further decision to take or any plans to change what was agreed by the October European Council. For the time being this remains the line,' he said.

He also said the EU executive was 'confident' that the Greek government and the IIF would 'be able to conclude shortly' their negotiations.

Prime Minister Lucas Papademos told CNBC broadcaster over the weekend that his country was to stay in the euro. 'I think withdrawal is really not an option,' he said.

Meanwhile in Athens, public transport workers on the capital's announced a 24-hour strike for Tuesday. Journalists across both the print and broadcast media are expected to strike on Tuesday and Wednesday.

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