Athens and its private creditors confirmed on Wednesday that a deal on the private sector involvement plan (PSI+) in the Greek debt haircut is likely to be reached in the coming days, with Kathimerini understanding that the average rate of the new bonds will stand at 3.6-3.7 percent.
The Institute of International Finance (IIF), which represents most private creditors in the negotiations, said of constructive talks continuing with the Greek government: “We hope that the various elements of the Greek package will come together in the days ahead,” IIF spokesman Frank Vogl stated on Wednesday. Private creditors are said to be setting as a condition for the completion of talks an agreement between Athens and its official creditors, the eurozone and the International Monetary Fund, over the second bailout package for the country.
Greek government spokesman Pantelis Kapsis also said on Wednesday that the PSI deal would be sealed in the next few days, while a more optimistic source from the Finance Ministry said that an agreement was “just hours away.”
Sources told Kathimerini that negotiations are all but complete, with an agreement on a average coupon between 3.6 and 3.7 percent and the banks’ losses at more than 70 percent in net present value. All that is left is some legal and technical details that have to be fine-tuned, the sources said. One of the last issues pending is the growth clause, as the interest rate of the new bonds will increase by a previously agreed rate, ranging between 0.3 and 0.5 percent, should the growth target for the Greek economy is achieved.
Meanwhile, pressure is growing on the European Central Bank to participate in the haircut, although it is increasingly likely that Frankfurt will avoid speaking on the issue before the deal between Greece and its private creditors is sealed.
“Politicians will bang their heads against the wall trying to get the ECB to be involved at this stage,” Carsten Brzeski, senior economist at ING in Brussels told Bloomberg on Wednesday.
“The ECB will stay out of this as long as it can. While they won’t take a haircut, not booking profits would be a realistic option.”
But consider this ......
http://ekathimerini.com/4dcgi/_w_articles_wsite1_1_01/02/2012_425591
A reduction in private sector wages would have damaging consequences for the state of Greece’s social security funds, which have already suffered a substantial fall in revenues as a result of the recession and growing unemployment, Labor Minister Giorgos Koutroumanis said Wednesday. Presenting Parliament with the state of finances at social security funds, Koutroumanis painted a negative picture of their viability. He said that the recession, which is entering its fifth year, had resulted in the funds losing 6.7 billion euros per year through lower contributions. He said that there were 471,000 fewer people insured with Greece’s main social security fund, IKA, last year compared to 2008. Koutroumanis said that he expected wages to drop by almost 8 percent this year, leading to further losses for the funds. The issue of a reduction to the minimum wage and possible cuts to the 13th and 14th monthly salaries that many private sector workers receive is one of the key stumbling blocks in Greece’s negotiations with its lenders over a new bailout. Koutroumanis was adamant that further cuts to salaries would be damaging for the funds. “A sudden drop in wages, through the scrapping of the 13th and 14th salaries and the minimum wage, would deepen the recession significantly and would lead to a loss of revenues for social security funds,” he told MPs on Parliament’s social affairs committee. Koutroumanis said that Greece’s ageing population would also put a strain on the pension system. He said that between 50,000 and 60,000 people are joining each year the list of Greeks drawing pensions.
and also this - i wish PM L- Pap well , but he has an impossible political task on his hands . He's herding kitties..... ........
http://www.athensnews.gr/portal/1/52869
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| Papademos seeks backing for reforms key to bailout |
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 | 1 Feb 2012 |
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| Prime Minister Lucas Papademos addresses Parliament (File photo) |
 The prime minister will call the country's political leaders in the next few days to seek backing for more austerity after the International Monetary Fund warned this was key to securing the new bailout Athens needs to avoid a messy default. Government spokesman Pantelis Kapsis said that a joint meeting chaired by Prime Minister Lucas Papademos will be held within the next few days before a agreement with the country’s creditors is reached. “Messrs Papandreou, Samaras and Karatzaferis will be called on to make very important decisions,” he stressed. With a long-delayed deal with private sector creditors to cut the debt mountain by 100bn euros nearly wrapped up, the government is now racing to complete talks on the 130bn euro bailout by the end of the week. To do so, the government must first persuade the European Union and the IMF - which have grown increasingly exasperated with its repeated failures to meet deficit and reform targets, that it will implement long-delayed reforms and slash spending further. Bankers said the bond swap deal, which will mean real losses of about 70 percent for Greek bond holders, is essentially done. But the second bailout and any official sector participation must be agreed before announcing a deal as all elements are interlinked. "The PSI (Private Sector Involvement) deal has been done but we are waiting for the second bailout to come together and no announcements should be expected before Monday," said a senior Greek banker close to the negotiations. "The coupon is under 4 percent." ECB action to further reduce the burden is seen as imperative and is proving a sticking point. The prospect of elections as early as April complicates the talks, with political leaders Papademos's government eager to distance themselves from any cuts that herald more pain for ordinary people. Antonis Samaras, leader of New Democracy, has rejected any further austerity, saying it risked plunging the country even deeper into recession. Several lawmakers from all three major parties have said the same. This worries the countries lenders, who want to make sure Athens will deliver this time. "We need assurances that whoever is in power after the election and reasonably wishes to make some changes in economic policy will make sure they are in line with the targets and the basic framework of the agreement," Poul Thomsen, the head of the IMF's mission for Greece, told daily Kathimerini on Wednesday. (Reuters/AMNA/ Athens News)
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