Friday, September 23, 2011

Greece's Finance Minister Admits Default

Brazilian newspaper O Estado de Sao Paulo reports today that The Greek finance minister, Evangelos Venizelos, told lawmakers of his party that the country faces the risk of a disorderly default, according to the Friday edition of a Greek newspaper. The publication adds that the minister has suggested a possible 50% discount on the debt. According to the newspaper Ta Nea, Venizelos presented to parliamentarians from the Socialist Party three possible scenarios for Greece.

In the first scenario, Europe would follow through with the commitments made at a summit July 21, extending a bailout plan to the Greeks, worth € 109 billion, but the offer including the country's creditors for a voluntary program exchange of debt.

In the second scenario, Greece could not reach an agreement with its international creditors in the coming days, what would the Greek government to run out of money in the middle of October and would require a disorderly default.

Without citing sources, Ta Nea reported that Venizelos also said a third option for the country, which would include an orderly restructuring of the Greek debt, but with lenders facing a loss of 50%. Such a scenario would be agreed with the creditors and allow the permanence of Greece in the euro area, the newspaper said. Ta Nea adds that this scenario seems to be gaining ground elsewhere in Europe.

The Finance Minister said, however, that it is counterproductive for the media to distribute information suggesting that the country set a default rating, with 50% losses to creditors. Although it has not directly denied it, Evangelos Venizelos reiterated Greece's commitment to achieve the deficit targets and to continue with an ambitious agenda of reform, as promised its European partners.

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