Talks with creditors stumble on sell-off fund

Talks with creditors stumble on sell-off fund

The issue of the new privatizations fund to replace the existing one, TAIPED, is evolving into a major stumbling block in the ongoing talks between Athens and the representatives of its creditors. Nonperforming corporate loans are proving to be another bone of contention.

According to the prime minister’s aides, the government foresees changes to the duties of the new sell-off fund which had been agreed in Brussels in July. Athens cites the reduction in banks’ requirements for their recapitalization in its request for a similar drop in the value of state assets to go on sale.

It will also request a change in the terms of use of the revenues, as it wishes to use a share of the takings for purposes other than the servicing of the state debt, the as yet undetermined obligations to stem from the bank recap and any fresh investment.

Late on Thursday government sources appeared reservedly optimistic that most of the issues on the table would close on Friday, with the biggest problem concerning bad loans, particularly the quota to be released for sale to distressed-debt funds. The sources did not rule out an extension of a few days regarding that matter. The government is hoping to see this issue dissociated from the payment of the 1-billion-euro sub-tranche, although that would require the creditors’ approval.

Meanwhile, since August, the European Stability Mechanism (ESM) has been working on a blueprint for the lightening of the Greek debt, including the extension of loan repayment periods, the linking of annual payments for debt servicing to gross domestic product and the freezing of part of the interest for a period, according to a document published on Thursday by the Wall Street Journal.

The blueprint is reported to have been distributed to Greece’s other creditors and discussed behind closed doors in Brussels. It examines a baseline and an adverse scenario and makes it clear that the new sustainability criterion for Greece’s debt should be that the annual cost of its servicing does not exceed 15 percent of the country’s GDP.

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