Greece said today that a debt rollover scheme critical for its economic survival and for the euro zone was going well as pressure mounted on its embattled government to deliver reforms.
"Progress is satisfactory, things are advancing in a positive manner," a Greek official said as a first deadline for the expression of bank interest expired, without revealing the level of participation in the scheme. Greece had said earlier that the swap would not be viable if the participation rate was below 90%.
The debt rollover is an integral part of a new €159 billion bail-out loan for Greece pieced together by the euro zone on July 21. Greece is under time pressures on several counts.
The new rescue package has run into trouble amid rising exasperation among Greece's fellow euro zone members over the tortuous speed of reforms mandated under a previous €110 billion lifeline extended last year.
Auditors from the EU, IMF and the European Central Bank suspended their work last week and sources close to the mission pointed to delays in fiscal reforms and the privatisation of state properties.
''As long as the troika cannot confirm that Greece has met its requirements, the next tranche for Greece cannot be paid," German Finance Minister Wolfgang Schaeuble warned yesterday. "The situation in Greece is serious, given the interruption of the troika talks and there can be no illusions about that," he added.
Experts from the European Union and International Monetary Fund arrived yesterday to work with Greek officials on the draft budget for 2012. The top EU-IMF auditors are due to return on September 14.
The Greek finance ministry has refused to divulge the limits of its cash reserves, while insisting that the next loan instalment will arrive before they run out. On Friday, top-selling Ta Nea daily said that Greek reserves will run out on October 18, which is why the Greek debt management agency intends to raise €2 billion in a treasury bill auction next week.
On the bond rollover, the Greek official noted that the September 9 deadline only concerned euro zone banks and funds and had already been extended to early October to cover global institutions. Greek Finance Minister Evangelos Venizelos has already noted that the initiative is expected to be completed by October 20.
Greece hopes to reduce its crushing debt, currently at over €350 billion, by €26.1 billion by buying back or rolling over maturing debt, and from lower interest on an earlier €110 billion bail-out from the EU and the International Monetary Fund.
The Institute of International Finance, an organisation representing over 400 banks and insurance companies, has said that private sector investors will contribute €54 billion from the middle of 2011 until the middle of 2014 and a total of €135 billion to the financing of Greece from the middle of this year to the end of 2020.
Under the plan, banks and insurance companies holding Greek sovereign bonds could swap them for longer-term ones, extending the repayment deadlines to give Greece breathing space and effectively reducing its debt. Greek investor roadshows to the US, Russia and Asia are also planned for late September.
