Greece, again...

The 110 billion Euro rescue package the Europeans and IMF put together a year ago to keep Greece from defaulting wasn't enough to do the trick. To avoid default this summer,  the Greeks need another bailout package of about the same size. Before that, however, Greece must receive the next disbursement (12 billion Euros) of last summer's package to meet the payments falling due in mid-July.


This time around, there are some differences in how the bailout package will be structured. One is that governments' negotiators have agreed that the private sector must participate “in the form of informal and voluntary rollovers of existing Greek debt”. Germany's Merkel had pushed for debt swaps but settled for rollovers, a solution of which the European Central Bank approves. 


Another important difference is that the IMF is insisting that the European Union fill the gap if the Greek government's financing plan falls short of its goals. Needless to say, stepping up to the plate for Greece is not popular with European governments. How large the shortfall could be depends on the efforts of the Greeks, including the success of their privatization program which is budgeted to raise 50 billion Euros. There's also the uncertainty about the size of the private sector's "voluntary" contribution.