Two themes will dominate the ministers’ talks: negotiations in Greece over bond-holder participation in the country’s second bail-out, and the latest draft of the inter-governmental treaty on fiscal discipline.

Their discussions come amid renewed fears about the global economy and calls by the International Monetary Fund (IMF) yesterday (18 January) to strengthen its lending power, perhaps by as much as $500 billion (€390bn), to protect the world from contagion from the eurozone.

Talks re-commenced in Athens yesterday between Greek authorities and the Institute of International Finance (representing bond-holders) on private-sector involvement in Greece’s €130bn rescue, after breaking down last week. Lucas Papademos, Greece’s prime minister, sought to put pressure on bond-holders, saying that he “would not exclude” making their participation obligatory.

Finance ministers will be asked to verify that any deal struck in Athens meets the parameters agreed by eurozone leaders at their summit on 26 October. Greece needs to reach a deal soon if it is to receive the next portion of its bail-out loan, with the country needing to repay bonds worth €14.4bn on 20 March.

The latest visit by the troika – the team representing the European Commission, the European Central Bank and the IMF – started in Athens on Tuesday (17 January). A Commission spokesman yesterday denied that the troika would put any pressure on the bond-holder talks, which are aimed at reducing Greece’s national debt from 180% of gross domestic product to 120% by 2020.

Close to a deal?

The situation in Greece will not be the only issue to concentrate minds on Monday. Finance ministers will also discuss the latest, and fourth, draft of the inter-governmental treaty on fiscal discipline, which was expected to emerge today (19 January). An official close to the talks said that member states were “near agreement” on most issues in the treaty.

But differences still remain on some matters, including the extent to which the Commission can be involved in taking wayward member states to the European Court of Justice, how many eurozone member states need to ratify the treaty before it comes into force, and whether the European Stability Mechanism (ESM) – the permanent eurozone rescue fund due to come into operation in July 2012 – should be open to all eurozone countries or just those that have ratified the treaty.

MEPs yesterday expressed frustration over the treaty and the perceived side-lining of the European Parliament under the new rules. Guy Verhofstadt, the leader of the Liberal MEPs in the Parliament and one of the Parliament’s three representatives at the treaty talks, said that the treaty was “a very dangerous exercise”.

The talks in Brussels and Athens are taking place against a backdrop of a worsening economic situation. Christine Lagarde, the IMF’s managing director, yesterday stressed the need to “contain the debt crisis in the euro area and protect economies around the world from spill-overs” by boosting the IMF’s lending capacity. The IMF is thought to be proposing a $500bn (€390bn) increase, which would include bilateral loans worth €150bn already pledged by eurozone countries.

Yesterday, the World Bank warned that the crisis in the eurozone could lead to an economic downturn as bad as that which followed the collapse of Lehman Brothers in 2008.

Further signs that the crisis was far from under control came on Monday when Standard and Poor’s, a credit-rating agency, withdrew its top-class triple-A credit rating of the European Financial Stability Facility (EFSF), the temporary eurozone rescue fund, following similar action on Friday (13 January) to downgrade France and Austria. Seven other countries were also downgraded.