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50% of Greek debt maybe written off

26 September 2011 13:05 (UTC +04:00)

Baku - APA-Economics. A draft plan to tackle the European debt crisis has emerged from the weekendâ€™s talks in Washington between the G20 leaders, World Bank and the International Monetary Fund (IMF).

It would involve 50 per cent of Greeceâ€™s debt being written off, recapitalization of the banks and a large increase in the size of the European Financial Stability Facility (EFSF) to â‚¬2 trillion.

However, before the plan is formally agreed it still has to pass some hurdles in gaining agreement from all of the countries in the eurozone. It is hoped that the plan will be formalized and agreed in five or six weekâ€™s time, in time for the meeting of G20 leaders in France in early November.

It is hoped that this announcement will bring calm to the stock markets around the world, but investors have so far been unimpressed with the rhetoric coming from political leaders and economic organizations such as the IMF.

Extending the EFSF would involve increasing its facility from the current â‚¬440 billion by up to four times. This would be possible by allowing the European Central Bank (ECB) to add additional lending to the fund.