ECONOMY

Greek default talk gets louder

While Finance Minister Evangelos Venizelos was trying to deny scenarios of a Greek default on Friday, officials of Greece?s European Union partners seemed to fuel speculation that an orderly Greek bankruptcy would include a haircut to Greek bonds higher than the 21 percent agreed in the last summit.

?Greece has made the definitive decision to do whatever it can to fully implement and in time all the decisions of the July 21 summit,? said Venizelos.

Separately, German Finance Minister Wolfgang Schaeuble suggested that the terms of Greece?s international rescue might have to be revised.

?One has to see whether what has been envisaged in June, July is still sustainable in the light of more recent developments,? Schaeuble told reporters in Washington before the annual meeting of the International Monetary Fund and the World Bank. At the same time, he said that ?to speculate on this at the current juncture would be wrong.? He didn?t say what any new terms might involve.

European Central Bank governing council member Klaas Knot told the Het Financieele Dagblad Dutch daily that a Greek default could no longer be ruled out, and that he wondered ?whether the Greeks realize how serious the situation is.?

Separately, the International Institute of Finance (IIF), which thrashed out the July Greek bond rollover plan, issued a report showing that its full implementation would make the Greek debt viable and that it would de-escalate from 155 percent of GDP this year to 122 percent in 2015 and 98 percent in 2020.

The IIF projections were based on the assumptions of privatizations revenue of 50 billion euros by 2015 and 3 percent growth rates between 2015 and 2020.

In response to reports that he had told deputies the alternatives to the July package were either an agreed 50 percent ?haircut? in Greek bonds or a disorderly default, Venizelos said, ?all other discussions, rumors, comments and scenarios that divert our attention from this central target… do not help our common European task.?

Greece?s two-year bonds currently yield almost 70 percent and credit default swaps indicate more than a 90 percent chance the country will fail to pay back its debt of more than 350 billion euros.