Greece Nears Debt Write-Off Goal

Greece's Finance Minister Evangelos Venizelos arrives for a cabinet meeting at the parliament in Athens, Greece, March 8, 2012.
Greece's Finance Minister Evangelos Venizelos arrives for a cabinet meeting at the parliament in Athens, Greece, March 8, 2012.

Greece is nearing its goal of getting the country's private lenders to eliminate $142 billion of the country's debt to help it avoid a default on its financial obligations later this month.

A government official told news agencies Thursday in Athens that banks, pension funds and financial institutions holding three-quarters of the country's debt already had agreed to write off more than half the money the country owes them. Greece set a night-time deadline for completion of the debt relief deals.

The Athens government is hoping for agreements covering 90 percent of its debt. But it has said that once the 75 percent participation rate was reached, it would impose the same terms on creditors who are unwilling to voluntarily accept steep losses on their investments.  
European leaders and financial analysts predicted the Athens government would be successful in winning pledges from its creditors ahead of the deadline. Greek Finance Minister Evangelos Venizelos was optimistic the debt relief deals would be completed.

"Today at midnight, my fellow deputies, a historical procedure is to be completed, a huge, unprecedented,complicated operation that drastically cuts the Greek public debt. If all goes well, tomorrow we will be able to announce that the Greek people, the state, the next generations, will be relieved of 105 billion euros of debt, 50 percent of GDP," said Venizelos. "For the first time in decades, for the first time in the history of the country, we have come together as a parliament, as a government, without our partners and reduced the debt.  Historically, every year due to fiscal deficits, even this year, the debt has increased, and now we are making a reverse move which in reality will give back to the new generation, the next generations that we took from them by over-borrowing."

Greece has adopted widespread austerity measures, cutting wages and pensions and eliminating thousands of government jobs, to meet the demands of international lenders so it could secure a new $172 billion bailout. It is the country's second rescue package in two years.

Venizelos said the debt relief will ease financial pressures on Greece and the 17-nation euro currency bloc that has struggled to control Europe's two-year governmental debt crisis.

"We are lightening the load of the country, we are allowing it to begin a new era. You ask if it was all easy and simple. No, it was all extremely difficult," said Venizelos. "And until the last minute we have been fighting to solve problems to face speculators in the international markets, to protect the country and for everyone in the eurozone to be protected which is vulnerable to speculative pressures, because this is an asymmetrical war."

With Greece planning to pay back the remaining debt it owes to the financial institutions over an extended period, those that bought the Greek bonds ultimately will lose about three-fourths of their investments.

Five small Greek pension funds holding about one percent of the bonds eligible for the write-down have rejected the deal, as have several investment funds and Germany's best-selling newspaper, Bild.

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