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10 October 2011

Reuters: Greece loan talks advance as EU delays summit


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The European Union postponed a summit to allow time for a broader solution to Greece's debt crisis, after Athens said it had concluded talks with international lenders on an aid payment needed to avert default.


Chancellor Angela Merkel and President Nicolas Sarkozy gave no details of their proposals but said they would also cover closer eurozone integration and steps to tackle Greece's debt mountain and prevent financial market contagion. "The German and French governments are convinced this will be a contribution to the eurozone winning back confidence and its capacity to act -- and I do mean a contribution, not the 'miracle cure' everyone keeps asking for", German government spokesman Steffen Seibert said.

"Further elements are needed to address the situation in Greece, the bank recapitalisation and the enhanced efficiency of stabilisation tools", Van Rompuy said in a statement, referring to the European Financial Stability Facility (EFSF) bailout fund.

In Athens, Finance Minister Evangelos Venizelos said Greece had wrapped up talks with European Union and International Monetary Fund officials, and expected private bondholders to make a bigger contribution than originally envisaged in a second bailout deal agreed in July. Greece says it needs an €8 billion aid instalment in November to avoid running out of money to pay salaries and pensions. Its next bond redemption is due in December. Venizelos said Athens expected improvements in the €109 billion rescue package agreed by eurozone leaders and hinted that banks will take heavier losses, calling it "PSI Plus". PSI stands for private sector involvement. "We expect an overall package better than the one initially drafted, because we have to take into consideration the new parameters", he said, alluding to a deeper than expected recession that has worsened Greece's budget deficits.

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© Reuters


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