BRUSSELS — Greek Prime Minister Lucas Papademos Monday reiterated that Greek party leaders would have to provide a written commitment to the adoption and implementation of the measures related to a new bailout plan for Greece.
“The leaders of the parties that support the government have already expressed their agreement through the vote of confidence…at the same time I added that it’s important that the party leaders respond positively to the request by the Eurogroup, the European Union and the IMF because this relates to a longer horizon than the expected horizon of this government,” Papademos said after a meeting with European Union President Jose Manuel Barroso in Brussels.
The signed letter has been repeatedly demanded by the EU as a precondition for the disbursement of a vital EUR8 billion tranche from the first bailout, but the Greek conservative party leader Antonis Samaras has said he won’t provide it.
An immediate priority would be to take “the necessary steps for the sixth tranche as soon as possible,” Barroso said, stopping short of announcing any progress on that front.
Barroso painted a dramatic picture of the situation that Greece is in, but repeated his confidence in the newly appointed Papademos. “The situation is extremely serious, more so perhaps so than in at any point in the past 18 months,” he said.
Another priority was to reach an agreement for a 50% write-down on Greek debt holdings with private sector creditors, the so-called PSI, as this was envisaged in the decision for a second Greek bailout, reached on Oct. 27.
“The voluntary bond exchange with private investors should take place at the beginning of 2012,” Barroso said.
The Greek prime minister said the PSI would cut the face value of Greek debt by 50% and bring debt levels to 120% of GDP by 2020. “I believe the prospects for the PSI are excellent,” Papademos said.
Barroso said the new government also had to implement the new Greek program, which will provide financing for the country for the next three years. “A second program of financial assistance to Greece for the next three years must be concluded by the end of this year,” he said.
Papademos said the new bailout would require a second medium-term financial plan. The first one was bitterly resisted by labor unions and many citizens.
The Greek prime minister was due to meet Herman Van Rompuy, president of the European Council, later Monday before traveling to Luxembourg to meet with Jean-Claude Juncker, president of the Eurogroup, the grouping of the 17 countries that use the euro.
(Source: Dow Jones)
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