Eurozone finance ministers to focus on Greek debt

Eurozone finance ministers are to meet later, with the Greek debt crisis likely to dominate proceedings. On the agenda will be what form Greek debt restructuring should take as part of a second bailout package for Athens. It comes after negotiators for private creditors left Greece without a deal to write off some of the country's debts. Separately, IMF boss Christine Lagarde has said the eurozone needs economic growth and bigger financial firewalls to resolve debt issues. Deadline The Institute of International Finance (IIF), which represents Greece's creditors, said a technical team would remain to work further on the details. European leaders agreed in principle last year that private lenders would voluntarily write off 50% of their loans to Greece, but private creditors still need to agree to the terms of the deal. A 130bn euro ($168bn; £108bn) rescue package from the EU and IMF is crucial if Greece is to meet its next debt repayment deadline in two months. Without the second bailout Greece will not be able to pay back 14.5bn euros in maturing bonds in March. If Greece defaults on its debts it could cause further economic havoc in the eurozone, and undermine the common currency. 'Solvency crisis' Christine Lagarde met German Chancellor Angela Merkel in Berlin on Monday. After the meeting, Ms Lagarde said that the eurozone needed a "larger firewall" to prevent the debt crisis spreading. "Without it, countries like Italy and Spain that are fundamentally able to repay their debts could be forced into a solvency crisis by abnormal financing costs," she said. She suggested "folding" money left in the eurozone's bailout fund, the European Financial Stability Facility, into the new European Stability Mechanism bailout fund, when the latter comes into force some time this year. She also said the European Central Bank should "provide the necessary liquidity support to stabilise bank funding and sovereign debt markets." And she repeated her view that "across-the-board, across-the continent, budgetary cuts will only add to recessionary pressures". 'Market wolf' A leading Australian economic report warned on Monday of the wider global implications of a eurozone meltdown. The quarterly Deloitte-Access Economics Business Outlook said it was "marginally" more likely the eurozone would manage to get through its current problems. For the time being, the report said, the European Central Bank looked able to keep the "market wolf from the sovereign debt door" but that the region was bound for recession. The euro hit its highest level in nearly three weeks against the dollar on Monday, at $1.2998 on hopes of positive signs from the finance ministers' meeting. And the common currency was up 0.4% against the pound at 83.42 pence.