Greece is trying to cut about $129 billion from its gargantuan $350 billion debt, but as creditors and rescuers face off, the complex deal appears stuck and time is running out, reports the Wall Street Journal. With $19 billion in Greek debt coming due March 20, European authorities had hoped to have a restructuring deal in place for today's eurozone finance ministers meeting. But weekend talks languished, reportedly deadlocked on the issue of compensation for creditors. Rescuers, such as Germany and the IMF, want costs to be as low as possible, perhaps 3.5%, but creditors are insisting on more than 4%.
Most of Greece's debt reduction is to come from reducing the value of the $259 billion in bonds held by Greek creditors, as those debts will be exchanged for new bonds worth about half as much and not expected to come due for decades. Creditors, in exchange, will receive about $38 billion in sweeteners, either cash or high-value, short-term notes. But with Greece unable to pay for those sweeteners on its own, Germany and the IMF must approve the deal. Failure to reach some kind of arrangement could have frightening consequences for the fragile eurozone economy.