Good progress on economic review

The European Commission said on Wednesday there had been ?good progress? in discussions between Greece and international experts evaluating the country?s finances and economic prospects, and that it was awaiting conclusions ?in the coming days.?

Specialists from the European Union?s executive branch, the European Central Bank and the International Monetary Fund are in Athens conducting a quarterly review of Greek measures to plug a multi-billion-euro hole in its deficit reduction plans and encourage economic growth.

They are reporting back on the readiness of the government in Athens to deliver on promises and therefore to receive the next 12 billion euros in loans from its eurozone partners and the IMF under a 110-billion-euro bailout agreed last year.

?We are making good progress,? said Amadeu Altafaj, spokesman for EU Economic Affairs Commissioner Olli Rehn. ?There is no major disagreement but still work to be done. We?re still expecting conclusions in the coming days,? he said, without going into details.

Greece?s European partners have been pressuring Athens for weeks to step up a program of state sell-offs, aiming to raise 50 billion euros toward the long-term objective of rebalancing its economy and getting a public debt approaching 350 billion euros onto a sustainable path. Discussions across European capitals are also ongoing over moves to sharpen the collection of taxes, amid work on a possible second bailout.

According to unnamed sources, Greek bondholders may be offered incentives to roll over maturing debt without triggering a credit rating downgrade that would roil Europe?s banking system. Options being examined include offering investors preferred status, higher coupon payments or collateral as inducements to buy bonds replacing Greek debt maturing between 2012 and 2014.

Late on Tuesday, Rehn said a Vienna-style system could be agreed upon with banks, which would mean they voluntarily agree to maintain exposure to Greece that would reschedule the debt.

The Vienna-inspired plan was a key plank in the IMF-sponsored rescues of Hungary, Romania, Latvia and Serbia in 2009. Under the plan, banks publicly pledged to keep their units in those countries afloat by rolling over funding and providing fresh capital if needed. The Vienna plan has drawn less hostile reviews from monetary policymakers than a debt ?reprofiling? or convincing bondholders to voluntarily accept an extension of maturities. The reprofiling option is still be considered.

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