Greece hopes for improved debt deal after EU-IMF talks wrap

ATHENS: Greece held out Monday for improved debt rollover terms from its private creditors as the finance minister said he had concluded key talks with the EU and the IMF on an audit to unlock fresh loans.

"We are expecting a 'PSI plus'," said Finance Minister Evangelos Venizelos, referring to a bond maturity rescheduling scheme put forward in July by the European Union involving the country's private sector banking creditors.

Government spokesman Elias Mossialos said: "We will accept any superior proposal that improves on the July decisions, on condition that it does not entail high risk and that it confirms Greece's euro zone membership."

Under the original scheme, banks were to take a 21-percent cut on their holdings of Greek government bonds maturing up to 2020 but after talks with the EU and IMF, Venizelos said an "improved" scheme would be discussed.

Greece has a sovereign debt of over 350 billion euros ($468 billion) and faces interest repayments of 17.9 billion euros in 2012, up from 16.3 billion euros in 2011.

In recent days there has been growing speculation that Athens would need a 50-percent rollover -- or perhaps even more -- to make this debt mountain sustainable.

Venizelos declared that he had concluded talks with a mission of EU, International Monetary Fund and European Central Bank auditors whose report later this month will determine if Athens will receive an eight-billion-euro loan disbursment.

"We have concluded the round of programmed meetings and the mission is expected to conclude by Tuesday," the minister said.

The report from the 'troika' of creditors is expected by October 24 when a decision will be made on the aid tranche.

Greece's reserves to pay wages and pensions runs out in November, when it could face default if the 8.0 billion euros is not forthcoming.

The money is part of a first, 110-billion-euro bailout extended in May 2010 in return for sweeping economic reforms which the socialist Greek government has had trouble implementing in full in the face of massive public opposition.

Public transport ground to a halt in Athens on Monday and tonnes of garbage piled up on the streets as workers downed tools again against the government's austerity plans.

"We discussed the viability of Greece's debt," Venizelos said, adding that the new rollover scheme would take into consideration "new parameters" in the banking sector, apparently referring to a growing credit crunch facing the banks.

Belgium, France and Luxembourg decided over the weekend to rescue Dexia, one of the largest banks in the euro area and the first to fall victim to Europe's debt crisis.

The Bank of Greece said meanwhile that it had activated a rescue fund to bail out small lender Proton Bank, which is facing an embezzlement probe and had already received an emergency state boost in July.