New Acronym On The Block: But What Does OSI Mean?
There have been almost as many new acronyms slipping into business news as there have been euro zone summits in recent months.
OSI – official sector involvement – is the latest term to be bandied around as part of the long drawn-out Greek bailout. It essentially covers all the public sector organizations, such as the International Monetary Fund and the European Central Bank (or the IMFand ECB, seeing as we’re talking acronyms) which will take part in the bailout.
It could work along with the more familiar PSI – private sector involvement – to help Greece get back on track, either by accepting a cut to Greece’s public sector debt or by providing even more bailout funds.
The IMF argues that slashing the face value of the 200 billion euros ($262 billion) of Greece's debt owned by private sector creditors will not reduce the government's hefty debt burden to the 120 percent of gross domestic product targeted by 2020, and that public sector creditors may also have to take a haircut to their debt. It’s not clear how much this writedown would be.
Germany, the euro zone’s largest economy, wants to keep OSI to a minimum, especially until there is more clarity on the progress of Greek reforms.
Attempts to pin down a deal on Greek debt in Athens continue on Monday. The deal will include a second bailout package of 130 billion euros, agreed last year.
“Every Monday we are coming in and seeing we have managed another weekend without getting past that hurdle in Greece,” Kit Juckes, Global Head of Foreign Exchange Strategy, Societe Generale, told CNBC Monday.
The situation in Greece appears to have worsened, with Jean-Claude Juncker, head of the Eurogroup of finance ministers, warning that a Greek defaultcannot be ruled out in an interview over the weekend, and the March 20 date when around 14.5 billion euros of Greek debt must be paid coming ever closer.
There is increasing pressure on the Greek government to implement long-delayed reforms to the tax and labor market, as key Greek unions prepare to strike over the prospect of more austerity and unemployment continues to rise.
Note: A previous version of this story incorrectly stated that 4.5 billion euros of Greek debt comes due on March 20. The correct amount is around 14.5 billion euros.