Euro zone finance ministers made progress on Wednesday on ways to keep Greece afloat, Germany said, as talks between Athens and its foreign lenders near conclusion over reforms it must implement to receive fresh emergency loans.
After a two-hour conference call of ministers from the 17-nation Eurogroup, German Finance Minister Wolfgang Schaeuble told a news conference: «There was considerable progress.»
Eurogroup chairman Jean-Claude Juncker said in a statement he expected a deal at the finance ministers’ face-to-face meeting on November 12 provided Greek authorities had completed a list of prior actions.
Schaeuble said ministers expected to receive a crucial report from the so-called «troika» of international lenders on November 11 or 12, near the deadline, but insisted: «Time pressure cannot lead to irresponsible solutions.»
The ministers received more bad news earlier when Athens slashed its forecast for a budget surplus before debt servicing costs next year, dimming one of its few bright spots as rounds of austerity deepen a recession already into its fifth year.
The government forecast a 4.5 percent economic contraction in 2013, which will push public debt to a record 189.1 percent of gross domestic product. The primary budget surplus is forecast to be just 0.4 percent, well down on the 1.1 percent pencilled in previously.
Greece’s lenders are not discussing at present another debt write-off, or «haircut», Thomas Wieser, the coordinator of euro zone finance ministers said, but EU diplomats say other ways of stretching out official loans are on the table.
The options included lengthening the maturities and reducing the interest rate on existing loans, an interest payment holiday, letting Greece buy back its own debt at a discount with borrowed money and allowing it to issue more short-term T-bills.
Even though IMF and EU officials say privately Greece’s debt is unsustainable and will have to be restructured, Schaeuble said that for a large majority of euro zone countries accepting a «haircut» was legally impossible.