Greece debt deal talks stalled

Debt write-down talks between the Greek government and senior bank creditors have been postponed until next week, leaving the country in “grave conditions.”

“All parties involved in this crucial negotiation ought to be aware of this very grave condition and assume their responsibilities to avoid the worst,” a Greek official told reporters.

The talks stall on Friday follows talks over a bond-swap needed in order for Greece to avoid a default.

On Thursday, Greek Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos began talks with global banking body, the Institute of International Finance.

“Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach,” a statement by the IIF said.

Following the meeting, the IIF, representing private bondholders, warned Greece that it was running out of time to reach an agreement.

The bond swap aims to reduce Greece’s debt by USD 127 billion (about 100 billion euros). Athens’ debt currently exceeds 350 billion euros.

The European Union (EU) and the International Monetary Fund (IMF) have provided Greece with two rescue packages in return for specific austerity measures, which include the cutting of public sector salaries and pensions, increasing taxes and overhauling the pension system.

Greece has the highest debt burden in proportion to the size of its economy in the entire 17-nation eurozone.

Europe plunged into a deep financial crisis in early 2010. Insolvency now threatens heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland, and Spain.