The talks, which are expected to last at least 10 days, will focus on the terms and conditions of the joint eurozone-IMF bailout plan agreed in Brussels earlier this month, so the package can be activated quickly if Greece requests the aid.
Eurozone countries have pledged 30 billion euros ($40.5 billion) in loans for this year but have not spelled out any longer-term commitments.
Athens has said it would prefer to continue borrowing on the international market, but its borrowing costs have skyrocketed in recent weeks due to investor fears it will default. On Wednesday the interest rate gap, or spread, between Greek 10-year bonds and German ones -- considered a benchmark of stability -- spiked to new record highs of 5.18 percentage points in the afternoon. The spreads translate into prohibitively high interest rates of about 8 percent -- more than twice those of Germany’s.
Struggling to cope with a debt pile of 300 billion euros, Greece needs to borrow about ¤54 billion this year alone and has a projected public debt of more than 120 percent of gross domestic product through 2011, before easing slightly the following year. But Athens says it cannot go on paying crushing interest rates to borrow on the market. The high rates reflect market concern about the country’s ability to pay back its debts. A default by a eurozone country would be a serious blow to the shared euro currency.
On Tuesday, Greece shaved its May borrowing requirement by raising 1.95 billion euros ($2.62 billion) in a 13-week treasury bill auction that was more than four times oversubscribed, the public debt management agency said.
Finance Minister George Papaconstantinou, who heads to the United States Friday to hold talks with IMF chief Dominique Strauss-Kahn and US Treasury Secretary Tim Geithner, on Tuesday stressed that the existence of the rescue package means Greece will not face the possibility of default. “If our country activates the mechanism, the approval will be very rapid. So there is no way that Greece will be left out on a limb in May -- either through borrowing on the markets or through the support mechanism,” he said.
