Brussels, 08/02/2012 (Agence Europe) - The Eurogroup will be meeting in Brussels at 6.00pm on Thursday 9 February to discuss Greece. The meeting has been convened by the Eurogroup chair, the prime minister of Luxembourg, Jean-Claude Juncker, who hinted on Wednesday afternoon that the meeting could well take place to discuss progress in the talks in Athens on a second Greek bailout. The convening of a Eurogroup meeting suggests that a full deal is close at hand.
After a series of postponements this week, the three main political parties in Greece (that are in the coalition government) finally agreed at 3.00pm on Wednesday 8 February to agree on the second bailout plan (financial aid of at least €130 billion and a write-down in Greek bonds in return for draconian budget cuts and macro-economic measures). The socialist party, PASOK, the conservative New Democracy party and the nationalist LAOS party have each received a copy of the document setting out key structural measures they will have to implement as part of the second structural adjustment programme. The measures include spending cuts of 1.5% of GDP this year, a 20% cut in the minimum wage in the private sector despite opposition from trade unions and employers, cuts in private pensions and a scrapping of 15,000 jobs from the civil service. Europe is demanding formal commitment from all three parties that they will apply the second programme no matter who wins the general elections in a few months' time. Any agreement will need rubberstamping by the Greek parliament next week. New Democracy leader Antonis Samaris, widely polled to be the next Greek prime minister, commented to Dow Jones about Merkozy's idea of a special guarantee fund for Greek bonds held by private or possibly even public investors (see EUROPE 10548): “I have a problem with that”, explaining “the escrow account is indirect oversight of Greece by Germany”.
Potential ECB involvement in bond writedown. The European Central Bank is reported to have agreed to a partial write-down of its holding of Greek bonds. Since May 2010, the ECB has bought some €40 billion-worth of Greek bonds on the secondary markets to shore up the country and the idea now, according to the Wall Street Journal, is to swap these bonds for others, backed by the European Financial Stability Facility, in the write-down of Greek debt expected next week. The ECB is reported to have agreed to not being fully reimbursed to the tune of around €10 billion to help reduce Greece's debt from the current 160% of GDP to a more manageable 120% by 2020. (MB/transl.fl)