GREECE went head to head with its creditors yesterday in a renewed attempt to break a deadlock in negotiations to slash the country’s debt and stave off default.

    International private sector creditors represented by the Institute of International Finance (IIF) were set to meet the government yesterday afternoon of the local time. Talks broke down Friday over the interest rate Greece will offer on new bonds and a plan to enforce investor losses.

    Ratcheting up pressure on hedge funds and other holders of Greek debt ahead of the talks, Prime Minister Lucas Papademos told the New York Times he will consider legislation forcing creditors to take losses on their holdings if no agreement can be reached.

    Papademos said that if Greece did not receive 100 percent participation in a program in which bondholders would voluntarily write down US$130 billion from Greece’s US$450 billion debt, the country would consider passing a law to require the holdouts to take losses.

    “It is something that has to be considered in the light of expectations about the degree of the participation to be achieved,” Papademos was quoted as saying in an interview.

    “It cannot be excluded. It is contingent on the percentage,” he said, while noting that he still expected the talks to be completed successfully.

    Cash-strapped Athens needs a deal with the private sector within days to avoid going bankrupt when 14.5 billion euros (US$18.54 billion) of bond redemptions fall due in late March.

    Hedge funds holding Greek bonds that mature in March may have the strongest hand. The Greek Government wants to swap out that maturing debt for new, lower-yielding bonds and a small cash payment.(SD-Agencies)