Euro zone finance officials voiced optimism on Friday that a deal to avert a disorderly Greek default was imminent and that key building blocks to resolve Europe's sovereign debt crisis are gradually fitting into place.
Europe’s top economic official said an agreement between the Greek government and its private creditors on voluntary losses for bondholders would be complete within days and the euro zone was making progress on strengthening its financial firewalls.
“We are very close to a deal, if not today then over the weekend and preferably in January, not February. We are very close,”" European Economic and Monetary Affairs Commissioner Olli Rehn told the World Economic Forum in Davos.
German Finance Minister Wolfgang Schaeuble, speaking on the same panel, said crafting a new rescue package for Greece was not easy because of past slippage in its performance, but it would be done in the coming days.
"We don't expect a default in Greece," he said. However, he cautioned that Athens would have to meet commitments to economic and fiscal reform that it had not delivered over the past two years and warned against giving Greece the wrong incentives.
The emerging private sector bond swap deal seems set to leave a funding gap of euro 12-15 billion to bring Greece's debt down to a level of 120 per cent of annual output regarded by the IMF as sustainable, EU officials say. Spanish Economy Minister Luis de Guindos said the European Central Bank should not have to take a writedown on its holdings of Greek government bonds, bought at a discount to calm bond markets, since that could impair its monetary policy.