February 3, 2012

Deadline for Greek Bailout Agreement Set for Monday

Ministers hope for boost in market confidence

Eurozone finance ministers intend to polish up an agreement to grant Greece a second bailout package by Monday in the hope that it will forestall the debt crisis and reassure markets.

Reuters reported that the deal should incorporate not just a commitment for new financing for the beleaguered country, but also specify additional reforms that Greece must undertake and spell out the size of losses banks and private bondholders will accept.

Olli Rehn, European Union economic and monetary affairs commissioner, was quoted saying, "We are very far in the negotiations and we should be able to close them in the coming days. We are negotiating a second program for Greece. The ball is now in the Greek court to agree to do its job concerning the prior actions [regarding economic reforms]."

While officials agreed back in October to provide another 130 billion euros ($171.1 billion) in funding to Greece, talks over the terms of that funding have stalled as investors have balked at writing off as much of the debt as apparently is necessary. Jean-Claude Junker of Luxembourg, chairman of the Eurogroup, said that talks between Greek officials and private creditors such as banks and insurance companies have been "ultra-difficult."

Looming over the talks has been the potential for Greece to default on its debt and perhaps depart the eurozone, throwing the joint currency and its currency partners into chaos. Under that sort of motivation, talks have been ongoing–.

On Monday morning, senior eurozone officials are expected to gather in Brussels to put together the final package; they plan to hammer out the final details in time to send it off for approval by eurozone finance ministers by 1600 GMT (11 a.m. EST) during an extraordinary meeting.

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