European Union and IMF experts began 10 days of crucial talks on Wednesday on details of rescue loans which Greece may request to avert default with its borrowing costs close to 8.0 percent.
Together with the European Central Bank, they opened talks with Greek Finance Minister George Papaconstantinou on probable “financial assistance”.
Amid strong signs that Greece is getting ready to appeal for help, the finance ministry said: “The discussions concern a three-year programme of economic policies.”
This “can be supported with financial assistance from eurozone members and the International Monetary Fund should Greek authorities decide to request the activation of the mechanism,” it said in a statement.
That was a reference to a rescue package tortuously agreed within the EU and eurozone, and involving the IMF, but which still leaves many aspects uncertain.
Among these are the precise terms, conditions, interest rates which would apply if and when Greece asks for help to avert partial default on debt falling due by the end of May.
Greece needs about 10 billion euros within the next few weeks and about 30 billion euros in total for the rest of the year to pay current bills including some pensions, and help it enact massive budget cutbacks and structural reforms imposed by the EU.
The Ta Nea newspaper here noted on Wednesday that “the final countdown” to Greece appealing for EU-IMF loans has begun.
Citing sources in Brussels, the daily said that the Greek government was unlikely to call for assistance before crucial regional elections in Germany on May 9 but that the appeal would probably be made on May 15.
An issue of 10-year Greek bonds totalling 8.5 billion euros expires on May 19, and must be redeemed if the government is to avoid a hugely damaging partial default.
The government has said it will not hesitate to call on the EU-IMF backup loan under the terms of a eurozone deal to extend Greece up to 45 billion euros (61 billion dollars) at preferential interest rates, should this prove necessary.
At UniCredit Bank in Italy, analysts said that “activation of the aid plan is the easiest and most sensible way out of the crisis.”
They said the debt redemption date was only four weeks away” and that “action needs to be taken quickly,” estimating that “45 billion euros should be enough to cover redemptions, coupon (bond interest) payments and the deficit until next year.”
Papaconstantinou told a news conference on Tuesday that “there is no chance that Greece will be left hanging in May.”
A solution would be found “either by borrowing on the market, or from our (EU) peers,” he said, referring to the stand-by rescue package.
Greece has been forced to pay record interest rates on international bond markets amid enduring investor doubts that its strategy to get its spiralling debt under control will work.
The government needs to borrow around 10 billion euros next month.
On Tuesday, Athens sold 1.95 billion euros worth of three-month treasury bills but at more than double the cost of its last comparable issue as buyers exacted a high price for their money.
The T-bill auction — the third in a week — comes after the interest rate on Greek 10-year government bonds rose to a record 7.807 percent on Tuesday.
In a bid to cut debt, the government has slashed spending and raised taxes in measures worth around 16 billion euros this year, angering labour unions which have staged general strikes and a series of work stoppages.
A union representing Communist workers on Wednesday began a 48-hour strike. State-employed doctors are also striking over the same period.
The entire public sector will shut down on Thursday as civil servants hold a 24-hour strike, while the union representing the private sector has also indicated plans for industrial action.
