ATHENS, Greece ? Greece's finance minister was to hold crucial talks in Athens on Thursday with the head of a global banking association representing private bond holders in negotiations over a debt reduction deal that is part of the country's second international bailout.
Evangelos Venizelos was to meet with Charles Dallara, head of the Institute of International Finance, most likely in the morning. Dallara was also to meet with Prime Minister Lucas Papademos, as pressure mounts for a conclusion to the negotiations on the bond swap.
Greece hopes to finalize the deal soon with private investors for a voluntary 50 percent reduction in the value of their Greek bond holdings ? before a looming March deadline to repay euro14.5 billion in bonds that will come due. The bond swap, known as the Private Sector Involvement, or PSI, is a critical part of Greece's euro130 billion ($165 billion) international rescue which was agreed on in October but whose details remain to be worked out. The deal is essential to containing the country's massive national debt, with the aim of reducing it to 120 percent of gross domestic product by 2020, from more than 160 percent now.
On Wednesday, Venizelos said the negotiations "have advanced and are now at a very good point." Athens has been pushing to finalize the deal ahead of the arrival in Athens of a team of debt inspectors from the International Monetary Fund, European Central Bank and European Commission, expected early next week.
People close to the talks said Thursday's meeting with Dallara could be decisive. They spoke on condition their name not be used due to the sensitivity of the negotiations.
Near-bankrupt Greece has been surviving since May 2010 on rescue loans from other eurozone countries and the IMF. In return for the initial euro110 billion bailout, the Socialist government at the time imposed a series of deep austerity measures, including salary and pension cuts and repeated rounds of tax hikes.
But Athens found itself consistently slipping on several of the reform targets laid out in the bailout agreement, and it became clear last year that a second rescue was needed to prevent the country from a messy default that could drag down other European countries that use the euro, and threaten the single currency itself.
The country's interim coalition government, appointed in November to handle the new bailout negotiations following a political crisis, is now rushing to pass a new batch of reforms and cutbacks to secure the second rescue package.
With recession in its fourth year, Greece is struggling to meet deficit-reduction targets and is calling on unions and employers to hammer out a voluntary wage-reduction deal for the private sector to try and make its battered economy more competitive.
Greece's budget deficit is expected to hit 9.6 percent of economic output in 2011, about half a percentage point above target, the country's development minister acknowledged Wednesday.
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