Greece, Creditors Near Deal
After long impasse, creditors lower demands, increasing bailout chances
By Mark Russell,  Newser Staff
Posted Jan 29, 2012 6:34 AM CST
Greece's Prime Minister Lucas Papademos (L) escorts Finance Minister Evangelos Venizelos after a meeting in Athens on yesterday.   (Getty Images)

(Newser) – After weeks of deadlocked talks, Greece again appears to be teetering toward a deal with its creditors, a key condition toward Greece getting its vitally needed $170 billion bailout, reports the New York Times. On top of a 50% loss already agreed to, creditors now appear willing to have interest rates on their bonds reduced below 4%, perhaps even 3.6%—the new rate would increase creditor losses to more than 70%. Creditors could receive more money if the Greek economy improves in the future.

All told, the $270 billion in Greek bonds would be reduced to $135 billion, and interest from those bonds would drop from $13 billion to $5.3 billion, according to the AP. Greece and the EU are seeking to reduce Greece's debt-to-GDP ratio from its current 160% to 120% by 2020. Despite worries that the Greek debt crisis could take down the entire eurozone, Greece last night rejected a German proposal to put more of its budget under EU control. Greece now faces pressure to enact further austerity measures, though legislators fearful of a vengeful electorate may not have the political will. "The coming days will be decisive for the next decade ... We must answer to tough dilemmas and we must do so with foresight and a sense of responsibility and not hide behind each other," says Greece's finance minister.