The International Monetary Fund has warned that public creditors may need to help fill the gap if talks between Greece and private banks fail.
The AFP news agency reported that the banks negotiating a debt reduction with Greece were meeting today in Paris. The committee is part of the Institute of International Finance (IIF) and comprises 32 banks, insurers and investment funds owed money by Greece.
IIF head and lead negotiator Charles Dallara is due back in Athens tomorrow for further talks on cutting €100 billion off the roughly €200 billion Greece owes private creditors. Dallara repeated yesterday that the banks would refuse to cut the debt by more than half.
The discussions have been held up in part by differences on the rate of interest to be applied to future bonds issued by Athens.
IMF chief Christine Lagarde said European public creditors would need to pitch in and help Greece if private banks did not agree to a sufficient cut in money owed to them.
She spoke following a report in the Financial Times that said the IMF was pressing the European Central Bank to forgo potential profits on €40 billion in Greek debt it holds.
World Bank aid for euro crisis effects
The World Bank said today it was making $27 billion available for countries in central and eastern Europe and Central Asia impacted hard by the euro zone crisis.
The bank said the euro area's ongoing debt crisis was hitting the former Soviet bloc countries hard by cutting trade, finance and worker remittances crucial to their growth.
It said that due to their close links with the euro zone, the countries of central and southeastern Europe face an economic slowdown this year.
The $27 billion will be made available to help them over the next two years, the bank said, to help maintain fiscal balances, continue supporting businesses, and strengthen social safety nets for the people most vulnerable to the downturn.
"While the effects of the euro zone crisis on the largest economies of Western Europe receive most of the world's attention, the crisis is also hurting people in emerging Eastern European countries, particularly the poorest in central and southeastern Europe," World Bank President Robert Zoellick said.
