ATHENS (Reuters) - The EU, the IMF and the ECB are working on a solution to reduce Greece’s debt along the lines of the Brady plan, which rescued Latin America from bankruptcy in the 1980s, Greek newspaper To Vima reported on Saturday.
Greece became the first euro zone country to receive an EU/IMF bailout in May, receiving 110 billion euros ($150.8 billion) in loans after it was forced out of capital markets due to its massive government debt and budget deficit.
Under the three-stage plan, Greece would borrow from the euro zone’s new rescue fund to buy back Greek bonds currently owned by the ECB and private bondholders at about 75 percent of their nominal value, the newspaper reported, citing a senior banker with knowledge of the talks.
The EU and the International Monetary Fund (IMF) would then extend the maturity of their bailout loans to Greece to 30 years. Private lenders owning more than 100 billion euros of Greek bonds would be invited to extend their maturity to between 15 and 20 years, To Vima said.
All these measures would result into the “re-profiling” of about two thirds of Greece’s total debt by the end of 2011, the newspaper reported.
Greece’s public debt is projected to peak at 158 percent of GDP in 2013, a level which many in financial markets say is unsustainable.
Speaking at the World Economic Forum in Davos, Switzerland, on Friday, Greek Finance Minister George Papaconstantinou said there were informal talks to find ways to reduce Greece’s debt burden without restructuring it, including a debt buyback.
Reporting by Harry Papachristou; Editing by Yoko Nishikawa