Photo: Milos Bicanski / Getty
Multiple sets of negotiations are still dragging on in Greece.Government officials are trying to reach a deal with the country’s private creditors on losses the latter will take in a controlled Greek restructuring. Meanwhile, the troika (European Central Bank, representatives of the European Union, and International Monetary Fund) are trying to pressure Greece into passing new austerity measures that critics fear would cripple economic growth.
Here’s a brief rundown of what’s being discussed right now:
– Bondholder losses of approximately 70 per cent, with coupons that would increase from 3.6 per cent as the Greek economy grows in the future.
– ECB involvement in the debt restructuring, something that the bank has appeared to consider only recently and might be in opposition to its mandate. It holds about €50 billion ($65.6 billion) in Greek bonds that it purchased at a discount. Private sector investors are reportedly demanding this official sector involvement (OSI) as a precondition for the haircut deal.
– Austerity measures include a steep reduction in minimum wage and a 25 per cent drop in private sector labour costs. labour unions have unsurprisingly rejected this move, although Greek leaders apparently agree “in principle” on the deal.
– Long-term sustainability of Greek public debt. The current debt restructuring appears unlikely to deliver on this.