ATHENS, Greece – Long-awaited talks between Greece and its rescue creditors to make the country’s debt sustainable could start as early as next month and would likely last until the fall or beyond, a senior official in the Greek government said Wednesday.
Greece’s national debt is still considered unsustainable despite massive spending cuts, after the recession shrank the economy by about 25 per cent. Debt is predicted to reach 175 per cent of gross domestic output this year.
The lion’s share of that debt is now comprised of money from the bailout loans received from other eurozone countries, which Greece has been hoping might agree to ease the terms of repayment. Experts say Greece could, among other things, be given better lower interest rates or more time.
Greece is currently drawing on two international bailout programs, worth a total of 240 billion euros ($331 billion) in loans, and the country is hoping to avoid piling on additional loans.
The government official spoke only on condition of anonymity because talks on debt relief will not be official before the publication of Greece’s 2013 budget deficit figures later this month.
In the shorter-term, Greece faces a shortfall in its funding plans through 2016.
The country could try to make up some of it by raising money on financial markets — the government said Tuesday it plans to tap bond markets in the first half of the year for the first time since it was bailed out in 2010.
Greece could also use 11 billion euros ($15 billion) of unspent money in bank rescue funds, the government official said.
“We have an 11 billion safety cushion. That’s a significant sum,” said the official.
He added, however, that Athens would await an October assessment of eurozone banks’ capital needs by the European Central Bank before making a decision.
Greek police imposed stringent security measures around the site of a two-day meeting of European finance ministers in Athens.
Police officers clashed late Tuesday with anti-austerity demonstrators who challenged a protest cordon that covered most of the city centre. Protests also occurred in Greece’s second largest city, Thessaloniki, where the rally ended peacefully. The cordon in Athens was lifted on Wednesday afternoon.
Associated Press writer Costas Kantouris in Thessaloniki contributed.