Brussels, 13/01/2012 (Agence Europe) - The European Commission said on Friday 13 January that the talks in Greece on private sector involvement in the second Greek bailout have to stick by the agreement reached by the October 2011 European Council. A spokesperson for EU Commissioner for the Euro Olli Rehn said that the Commission was not directly participating in the talks, but was closely monitoring developments to ensure that the agreement reached by Greece and private sector holders of its bonds complies with the decisions of the 26-27 October European Council meeting. Some €30 billion of the total €130bn aid package will serve as an incentive to get the private sector to write down the face value of its bonds as a way of reducing Greece's debt from the current 160% of GDP to 120%. The Greek media suggest the talks (due to take place at the highest level on Friday) are in deadlock over the 5% interest rate demanded by the banks which the Greek government say is too high. The troika of Greek lenders (the European Commission, the European Central Bank and the International Monetary Fund) will send fact-finders to Athens on Tuesday 17 January to examine the country's economy and budget. Despite draconian austerity measures, Greece's deficit only fell by 1% in 2011, to 9.6% of GDP. In the month of October 2011, unemployment rose from 17.5% to 18.2% of the working population, and the country's economy is expected to contract by 2.8% in 2012. Athens is hoping, however, to achieve a primary budget surplus this year, meaning that disregarding debt servicing costs, its budget will be in surplus. (MB/transl.fl)