Private Banks May Have To Forgive Half Of Greek Debt


International lenders say private banks lending money to Greece may have to forgive the debt-ridden country more than a half of what it owes them.

The latest review by European Union and International Monetary Fund experts shows that a Greek bond writedown of 50 to 60 percent would still leave the country’s debt burden bigger than its yearly economic output by 2020.

European Union finance ministers Friday approved another $11 billion segment of Greece’s 2010 international bailout to keep it from going bankrupt. That leaves only the International Monetary Fund to sign off on the payment, which is a part of the $159 billion bailout.

European leaders are meeting Sunday and again next Wednesday to discuss how to stabilize banks faced with massive losses form the Greek debt and how to boost the eurozone’s bailout fund.

German Chancellor Angela Merkel and French President Nicolas Sarkozy have been unable to reach accord on a common plan. They are set to meet Saturday in Brussels to try to reach an agreement ahead of the EU summit Sunday.

France is seeking to turn the continent’s bailout fund into a bank that would have access to vast sums of credit from the European Central Bank. But Germany contends it would diminish the bank’s impartiality. Berlin is advocating that private European banks assume bigger losses on their Greek debt. France and the continent’s central bank say that would weaken these banks and lead to further turmoil on the world’s financial markets.

One of Europe’s leading bankers, Commerzbank chief Martin Blessing in Germany, said Greece should declare itself bankrupt and restructure its debt. He said European banks won’t voluntarily accept bigger losses on their Greek debt unless the country acknowledges it is insolvent.


The VOA is the Voice of America

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