The EU, the IMF and the ECB are working on a solution to reduce Greece’s debt along the lines of the Brady plan, which rescued Latin America from bankruptcy in the 1980s, according to reports.
Speaking at the World Economic Forum in Davos on Friday, Greek finance minister George Papaconstantinou said there were informal talks to find ways to reduce Greece’s debt burden without restructuring it, including a debt buyback.
Greece became the first eurozone country to receive an EU/IMF bailout in May, receiving €110bn (£94.3bn) in loans after it was forced out of capital markets due to its massive government debt and budget deficit.
Under the three-stage plan, Greece would borrow from the eurozone’s new rescue fund to buy back Greek bonds currently owned by the ECB and private bondholders at about 75 per cent of their nominal value.
The EU and the International Monetary Fund (IMF) would then extend the maturity of their bailout loans to Greece to 30 years. Private lenders owning more than €100bn of Greek bonds would be invited to extend their maturity.