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Business

Greece seeks debt rollover to bridge fiscal gap

Desperate to cover a widening budget shortfall, Athens plans to ask the European Central Bank to roll some of Greece's debt over. That would buy the country time to stave off bankruptcy.

The Greek government was considering asking the European Central Bank to roll over bonds held by the ECB and maturing between 2013 and 2016, Deputy Finance Minister Christos Staikouras said in a document to parliament disclosed Tuesday.

Greek bonds worth 28 billion euros ($36 billion) were currently being held by the ECB, for which an extension of maturities was examined within the framework of restrictions under the Lisbon Treaty, Staikouras wrote in the document.

Staikouras expressed the hope that the maturity of ECB-held bonds could be extended by mutual agreement.

"The only alternative would be to continue issuing short-term debt for state funding," he added.

Apparently, the Greek government is seeking the extension to lower servicing costs on its huge sovereign debt, thus partly bridging a widening funding gap over the next few years.

On Monday, Christine Lagarde, the head of the International Monetary Fund, said that delays in meeting Greece's fiscal targets and state asset sales had created a massive financing shortfall.

Athens, however, desperately needs to prove progress on its reform program - mandated by the European Union, the ECB and the IMF - to unlock a new loan installment under a 130-billion-euro bailout.

Under the original bailout program, Greece was supposed to return to the long-term debt markets in 2012, after it had been cut off from such funding for more than two years.

Staikouras has now told parliament that the government plans to place 7.6 billion euros worth of debt in financial markets in 2015 and bonds to the tune of 3 billion euros in 2016 at the earliest.

uhe/mkg (Reuters, AFP)

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