EU Official: Greece Needs Another €15 Billion to Survive

Greece needs another 15 billion euros if it is to get its debt down to manageable levels, according to a European Union official who spoke on condition of anonymity.

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The debt-ridden country is close to a deal with private creditors to reduce its debt burden by about 100 billion euros, and intends to enact deep spending cuts that will pave the way for a second, 130 billion-euro bailout, but the official said neither would be enough to help fix Greece’s problems.

To reduce Greece’s debt burden to 120 percent of gross domestic product within eight years, the country’s international debt inspectors have calculated that Greece needs an additional 15 billion euros.

Theoretically, the extra funds could come from other euro-zone states, or it could be raised by having the European Central Bank, its counterparts and state-owned banks, take a loss on their Greek bond holdings, the official said.

The ECB is estimated to hold between 50 and 55 billion euros in Greek bonds by face value, but cannot simply write them down without breaking the EU treaty, which prohibits the bank from financing governments.

The official also said that, if Athens is to receive its next bailout payment in time to pay back 14.5 billion euros in bonds on March 20, Greece will have to announce a deal with private creditors to take losses on their holdings by the end of this week. Experts from national finance ministries will examine the deal on Friday, at which point they will likely discuss how to close the 15 billion-euro financing gap.

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