ATHENS: Eurozone members are debating milder recovery terms for debt-hit Greece as it struggles to stick to a harsh austerity plan, Greek media said Saturday after emergency talks in Luxembourg late Friday. The reports said Finance Minister George Papaconstantinou had flown to a “secret” meeting among G20 eurozone states that debated giving Athens more time to repay a 110-billion-euro ($157 billion) EU-IMF loan and easier deficit reduction targets. The prospect of a repayment extension on Greek debt held by banks was also raised, the Greek reports said. “The meeting discussed the extension of bonds that mature this year and in 2012 worth around 65 billion euros to give the country a breather as it is unclear when it will be able to tap markets,” said financial daily Naftemboriki. The Kathimerini daily said the meeting had tackled “the extension of Greek debt along with the postponement of deficit reduction targets by two to four years.” Citing unnamed sources, Kathimerini said one scenario involves Greek debt holders being offered higher rates in the long-term in return for giving Athens a two-year “grace period” in which it would not have to pay interest. Shortly before midnight, the finance ministry confirmed that Papaconstantinou had attended an “emergency” meeting called by Luxembourg Prime Minister and eurogroup chairman Jean-Claude Juncker “to exchange views on matters including economic developments in Greece.” The late-night meeting in Luxembourg sparked feverish speculation after German news magazine Der Spiegel said Athens could seek to exit the eurozone. Europe's inner currency cabal dismissed this notion as “stupid” and also excluded a restructuring of Greece's sovereign debt, which has exploded to 340 billion euros ($493 billion). Athens now owes more than a year-and-a-half of its entire economic output, which markets consider unsustainable. With yields on Greek government 10-year bonds having leapt to more than 15 percent and on two-year bonds to more than 23 percent on the secondary market, many investors doubt that they will be repaid. Greece made an enormous effort last year to apply a stringent austerity program overseen by the EU, the International Monetary Fund, aiming to slash a runaway deficit that hit 15.4 percent of output in 2009. But despite tax hikes, wage reductions and sweeping spending cuts, targets fell short because of a deepening recession in the economy. Instead of a calculated 9.4 percent, the government only managed to limit the deficit to 10.5 percent of GDP in 2010, EU data agency Eurostat said. Juncker confirmed that the area's finance ministers would discuss a second re-negotiation of repayment terms on Athens' EU-IMF bailout — likely to stretch well into the next decade at least — at their next scheduled talks in Brussels on May 16. The Greek government said the idea it could withdraw or be kicked out of the common currency area was “completely untrue... provocative... (and) highly irresponsible.”
