BRUSSELS (MNI) – Eurozone finance ministers and senior
International Monetary Fund officials ended a nearly 12-hour meeting
with no agreement on how to bring Greece’s debt down to a sustainable
level, and they failed to approve an overdue tranche of bailout loan
money for the country despite a looming threat of bankruptcy.

The failure to approve immediate payment of a long-overdue E31.5
billion loan tranche to Greece came despite official acknowledgement
from Jean-Claude Juncker, who chairs the Eurozone finance ministers’
group, that Greece had met all the conditions demanded of it.

The 17 Eurozone finance ministers, together with the heads of the
European Central Bank, International Monetary Fund and the EU’s Economic
and Monetary Affairs Commissioner, Olli Rehn, discussed a package of
options to reduce Greece’s national debt to 120% of GDP by 2020 – the
benchmark for sustainability upheld by the IMF.

The measures include the possibility of cutting interest rates on
bilateral loans to Athens; granting an interest holiday for Greece’s
debt repayments; a debt buy-back scheme for privately-held Greek
government bonds; and the possibility of passing on to Athens the
profits earned from Eurozone central banks on their Greek sovereign bond
holdings.

And Eurozone officials are also weighing further action, including
the possibility of imposing losses on Greece’s official sector creditors
in 2016, sources told MNI earlier Tuesday.

Coming in to the meeting on Tuesday afternoon, EU Economics chief
Rehn said, “we should be ready in the coming years to take further
decisions if needed, in order to ensure that there is the sufficient
debt sustainability of Greece.”

Eurozone finance ministers broke up their meeting around 0330 GMT
on Wednesday morning “to allow for further technical work.” They said
they would meet again next Monday.

The bond buy-back plan, in which Greece would use aid money to
purchase and retire some of its own bonds at current low market prices,
is understood to be particularly problematic and has drawn the wrath of
the Institute of International Finance, a private banking lobby which
negotiated a haircut on Greece’s privately-held debt last year.

A senior source told MNI that the IIF had sent Greece’s bailout
partners a letter warning them that the scheme, which would imply
further haircuts on private investors’ bond holdings, could lead its
members to shun Greece when it eventually seeks to regain market access.

–Brussels Newsroom, +324-952-28374; pkoh@mni-news.com
–apapamiltiadou@mni-news.com; +324-700-68317

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