Parliament Debates Debt Deal Amid Protests

The Greek government braced for further anti-austerity protests Wednesday while the country’s parliament was debating legal changes that would clear the way for a massive debt restructuring to keep Greece from defaulting on its loans next month.
The legislation, which is to be put to the vote on Thursday, retrofits outstanding Greek bonds with so-called collective-action clauses, aimed at forcing losses on bond holders who may resist a voluntary debt restructuring that will see private-sector creditors who own some €200 billion ($264.7 billion) of Greek bonds take a 53.5% haircut.
The Greek government is aiming for minimum participation of at least two-thirds of bond holders in a planned debt exchange, a finance ministry official said Tuesday, with a formal offer on the exchange expected to come by the end of this week.
The debt write-down plan aims to erase some €107 billion from Greece’s sovereign debt burden. It is part of a related €130 billion loan deal agreed to by euro-zone finance ministers in the early hours of Tuesday.
The debt restructuring is part of a deal with Greece’s international creditors—including the International Monetary Fund, European Central Bank and European Union—to put the country back in a position to reach a sustainable debt level by 2020. Greece, meanwhile, is facing more resistance to its pledge to continue cutting its budget deficit, requiring more austerity measures that will cause new hardships for businesses and households as the country continues into its fifth year of economic recession. Recent weeks have seen a series of mass protests, clashes with police and nationwide labor strikes.
Again late Wednesday, authorities were expecting protests against new plans to cut private sector wages, sack 15,000 public-sector workers and push through more than €3 billion in government spending cuts this year alone, including further reductions in pensions and health care spending.
(source: Dow Jones)