| MEXICO CITY
MEXICO CITY Nov 5 - International lenders and
Greece are on track to reach a deal to unfreeze emergency
lending to Athens at a meeting of euro zone finance ministers on
Nov. 12, EU Economic and Monetary Affairs Commissioner Olli Rehn
said on Monday.
Highly indebted Greece has fallen behind with reforms and
fiscal consolidation demanded by the International Monetary Fund
and euro zone countries in exchange for new loans, because of
two rounds of elections and a deeper-than-expected recession.
Athens expects its debt to GDP ratio to reach almost 190
percent next year while euro zone and IMF officials believe it
can only be sustainable if brought down to around 120 percent.
A senior EU official, speaking on condition of anonymity,
cast doubt on Monday if a deal on Greece could be struck next
week, because of there was no agreement yet on how to cut Greek
debt. Even if there were agreement, several countries, including
Germany, still had to discuss the matter with their parliaments.
But Rehn said a deal would be struck next Monday, when euro
zone ministers, called the Eurogroup, meet in Brussels.
"We need to have a common view on how to reduce the debt
burden by the Nov. 12 Eurogroup meeting and I am confident that
we will be able to reach that common view," Rehn told a news
conference after a meeting of finance officials from the G20
Progress, however, depended on good will of Greece too.
"In parallel, or, in fact, prior to that, the Greek
government is first expected to adopt a fiscal package of
structural reforms and then the Greek parliament is asked to
endorse this package as prior actions so we can proceed towards
a decision next Monday," Rehn said.
"We are on track to take the decision on the 12th of
November but it will require quite some work still from
everybody including the Greek parliament, including the EU and
IMF representatives," he said.
One of options to reduce the debt pile in Greece could be
for Athens to borrow money from the euro zone and buy back its
bonds at the deep discounts they now trade at.
Other possibilities include lower interest on existing
loans, lengthening their maturities and grace periods of
interest servicing as well as the European Central Bank
foregoing profits it may make on the Greek bond portfolio it
Asked if a debt buy-back was the preferred option, Rehn
"I would expect that we need a combination of elements and I
would certainly not rule out the issue of a debt buy-back but
it's still a bit premature to say anything definitely on this