Greek PM confident on debt talks

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Greek PM confident on debt talks

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Greek Prime Minister Lucas Papademos has promised that a debt swap will be reached in time between his government and its creditor banks.

Papademos has send senior officials from Athens to Washington to break a deadlock in talks that has prompted new fears of a disorderly default by Greece.

It needs a deal by March with the private sector, the EU and the International Monetary Fund to avoid going bankrupt.

The head of Greece’s debt agency and a senior adviser travelled to Washington on Monday to meet IMF officials.

Under the bailout terms agreed in October, Greek privately held debt would be reduced by half so that, together with structural reforms, the overall debt to GDP ratio of Greece would fall to 120 percent in 2020 from 160 percent now.

Inspectors from the EU, the IMF and the ECB “troika” have warned they need the deal with the private sector to achieve that debt-reduction goal before they dole out more money.

Senior inspectors from the troika are due in Athens next week for talks to finalise a second, 130-billion-euro bailout agreed in October, with their team of technical experts arriving on Tuesday, a Greek government spokesman said.

Charles Dallara, head of the Institute of International Finance who represents Greece’s private creditors, told the Financial Times an agreement in principle was needed by the end of this week if it was to be finalised in time for the March bond redemptions. He said the Greeks were not the problem.

“All the European heads of state said they wanted a deal with a 50 per cent (haircut) and a voluntary agreement,” Dallara was quoted as saying. “Some of their own collaborators are not following that decision.”

Negotiations stalled over the interest rate Greece will pay on new bonds it offers.