Euro zone finance ministers have scrapped plans to meet on Monday as talks on a deal to restructure Greece's massive debt drag on, but they could gather later next week if agreement is reached.
"There will be no Eurogroup meeting on Monday," read a statement issued by Luxembourg's government on behalf of Prime Minister Jean-Claude Juncker, who heads up the group. But the statement added that a ministers' meeting may be scheduled later in the week.
Euro zone governments and banks have both been playing hardball for weeks in their bid to reduce by at least half the €200 billion of privately-held Greek debt. The country's overall debt stands at €350 billion.
Greek Finance Minister Evengelos Venizelos had told Greek TV that talks on the write-down would be concluded with a view to a Monday meeting, which numerous officials said was pencilled in as a teleconference call.
In Athens, Prime Minister Lucas Papademos said Greece was in the "final phase" of negotiations on a euro zone bail-out dependent in the first instance on a debt writedown.
In Brussels, Amadeu Altafaj, spokesman for the European Union's top economic affairs commissioner Olli Rehn, also said a deal was "within reach".
Josef Ackermann, the head of Deutsche Bank, Germany's biggest private bank, and chairman of the Institute of International Finance leading creditors in the negotiations, said yesterday he may go to Athens this weekend in a bid to close the deal.
The goal is to reduce Greece's debts to an IMF target of 120% of gross domestic product (GDP) by 2020, from the current 160%.
Thereafter, as Altafaj confirmed, a new Greek programme of further austerity and reform will come into play, and will look at "all aspects" of labour market reform, which could involve a reduction of minimum wages for Greek workers. "Everything is up for negotiation, nothing is imposed," Altafaj said.
Banks say the debt-swap proposed over the longer term means they would in essence lose 70% of the roughly €200 billion in debt held by private institutions. This would then enable talks to proceed on a fresh €130 billion bail-out by the euro zone, EU and IMF partners for Athens.
But a row is continuing over a shortfall said by officials to be around €15 billion. This may need to be made up by public creditors, although the exact picture will become clear only when the deal on so-called Private Sector Involvement (PSI) is settled.
A proposal is on the table with ministries to cover this Official Sector Involvement (OSI) part of the deal. But the OSI approach could jeopardise an ECB programme of bond-buying that has kept bigger, heavily-indebted economies in Italy or Spain away from trouble.
