France: Banks Agree to Give Greece More Time to Pay Loans

Posted June 27th, 2011 at 4:25 pm (UTC-5)
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French President Nicolas Sarkozy says French banks have agreed to help Greece overcome its debt crisis by stretching out most of their existing loans to the Greek government, which is trying to pass an austerity plan to avert bankruptcy.

Speaking at a news conference Monday, Mr. Sarkozy said his government has persuaded the banks to give Greece more time to repay 70 percent of private French loans that mature in the next three years.

Athens would have to repay the remaining 30 percent of private French loans immediately on maturity. French banks are among the biggest holders of Greek sovereign debt.

Mr. Sarkozy encouraged other EU nations whose banks have lent heavily to Greece to use the French plan as a model for preventing a Greek debt default. France presented the plan at a meeting of EU officials and international bankers in Rome on Monday, but Italian officials said no decisions were taken.

Greece faces a debt default as early as next month unless it secures $17 billion from a bailout package offered by the International Monetary Fund and European Union last year. To qualify for the payment, Greek parliament must pass a series of unpopular austerity measures by Thursday. Lawmakers began to debate the package Monday.

The measures, proposed by Greek Prime Minister George Papandreou's Socialist government, include five years of drastic spending cuts, tax increases, and sell-offs of state-run companies. Mr. Papandreou hopes to push the measures through parliament using his party's slim five-seat majority in the 300-member assembly.

The proposed austerity measures have angered Greek labor unions which are launching a two-day general strike on Tuesday, the latest in sometimes violent protest actions against the tough reform measures.