June 2, 2011 / 4:51 PM / 8 years ago

EU agrees in principle on new Greek plan-source

ATHENS, June 2 (Reuters) - Senior euro zone officials have agreed in principle on a new three-year adjustment programme for Greece to run until mid-2014 and involve increased external funding, a source close to the negotiations said on Thursday.

The Economic and Financial Committee (EFC) of deputy ministers and senior officials of the 17-nation currency zone approved the Greek programme in principle in talks in Vienna that ended after midnight, the source said.

The second programme for Greece, which will effectively supersede the 110 billion euro ($160 billion) bailout agreed in May 2010, will involve some participation of private sector investors but limited to avoid triggering a credit event, the source said.

Details of that involvement, and the apportionment of the additional official international funding, remain to be worked out in time for a June 20 meeting of euro zone finance ministers, the source said.

He declined to comment on figures but said the programme would cover Greece’s funding needs on the assumption that it could not return to private capital markets in 2011 or 2012. The original bailout envisaged Athens raising 27 billion euros on the markets next year and 38 billion in 2012.

A troika of EU, European Central Bank and International Monetary Fund inspectors has been working with the Greek government for weeks on a detailed plan of additional spending cuts, revenue increases and privatisations to get Athens back on track after it missed fiscal targets due to a revenue shortfall.

The source said the programme would involve detailed commitments by Greece on the governance of a new national wealth agency and the timing of specific privatisations, but it would stop short of intrusive international supervision of the agency. (Reporting by Paul Taylor; editing by Dina Kyriakidou/Ruth Pitchford)

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