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Victoria Mindova 

Companies in Greece are preparing for the era of the new drachma. This became clear after the manager of the Greek telecommunications company OTE, Kevin Kopp, said at Morgan Stanley’s forum in Barcelona that ​​the company is considering various scenarios in order to be protected if Greece exits the euro zone. He stressed that the main objective is maintaining the company’s liquidity despite the development of the Greek debt crisis.

Meanwhile, negotiations for the involvement of private creditors in the foreign debt reduction (Public Sector Involvement PSI +) continue. The head of the International Institute of Finance, Charles Dallara, expressed his belief that the programme will involve at least 70% - 80% of the investors holding Greek government bonds. To fit within the timeframe of the mandate of the present interim coalition government, the negotiations should be completed by the end of the month and by the end of January 2012, old bonds should be exchanged for new ones with reduced face value as agreed on October 26.

"If the PSI (the programme to reduce the debt) is carried out in full in 2012, Greece will pay € 3.6 billion less interest on its obligations compared with this year. Without this programme, the obligations we would have to cover would be € 5.1 billion more," said Minister of Finance Evangelos Venizelos at a press conference after the introduction of the 2012 draft budget in parliament. He stressed that the ultimate goal is to reduce Greek debt by about 47% of GDP and together with structural reforms to have the foreign debt reach 120% of GDP in 2020 and the economy produce primary budget surpluses.
 
"Please, note that currently, the total foreign debt of euro zone countries amounts to about 90% of GDP. Therefore, the Greek foreign debt within 120% of GDP according to the signed agreements and at limited interest rates could be absorbed completely. This would allow us to regain our economic independence in a reasonable timeframe." Venizelos said that private lenders understand the seriousness of the situation in the euro area and are willing to negotiate, so as not to lose their investment completely. As for state insurance funds, the Minister of Finance insisted that they would rather profit than lose from the exchange of new government bonds for bonds with lower face value. He explained that the securities the funds are currently holding have no value in the secondary bond market and are in fact non-marketable. The new bonds will come with the guarantees of the European Financial Stability Facility and they will have higher rating, which will make them more stable.

Venizelos announced that the representatives of the supervisory Troika of the European Commission, the European Central Bank and the International Monetary Fund had arrived at the end of this week. They will meet in turn with him and the Prime Minister of the coalition government Lucas Papademos. During the weekend, they will hold face-to-face talks with the leaders of the two major parties in parliament, PASOK and New Democracy, to discuss the political situation in the country. The supervisors want to see that Greece is united on the issue for the economic future of the country. Their assessment will be crucial in granting the sixth tranche of the first bailout worth € 8 billion and the first tranche of the second bailout agreed on October 26 this year. It is worth € 80 billion and Greece will receive it if it completes the exchange of government bonds (PSI) and applies in practice its obligations such as the labour reserve in the public administration, the unified payroll table for civil servants and the adoption of the new National Tax System that is still wishful thinking.

For the timeframe within which the sixth tranche of the bailout would be paid, a representative of the International Monetary Fund said that they were ready to assist the new government as soon as they were assured that there was broad political support in the country for the measures under the new funding program and the chosen policy. Only then, would they proceed to complete the fifth assessment of the development of the Greek economy. The International Monetary Fund does not insist, like the supervisors of the European Commission, that political leaders should sign the formal document, but the organization will not grant the promised funds, if it is not convinced that consensus prevails in Greece for the implementation of the coming measures.