BRUSSELS—A long-awaited agreement to restructure more than €200 billion ($262 billion) of Greek government bonds in private hands is being held up in large part by big differences between two of Greece's official creditors: the International Monetary Fund and Germany.
Several people close to the negotiations say a deal between Greece and private bondholders could be concluded in hours, as only small differences remain between the two sides.
But the rift between the IMF and Germany—on top of a desire among all official creditors to secure a solid commitment from Greek politicians across the political spectrum to big changes in the economy's structure—has delayed final completion of the accord.
The IMF has argued, increasingly vociferously, that cutting the face value of the €200 billion of Greece's debt in private hands won't be enough to reduce the government's debt to the official target of 120% of gross domestic product by 2020—a goal many analysts consider not ambitious enough.
The fund says a credible deal will also require sacrifices from Greece's official creditors in Europe—the European Central Bank and national governments. In a sign of how the issue has moved onto the agenda, it has spawned an acronym: OSI. That stands for "official-sector involvement" and is a parallel to PSI—private-sector involvement, the euphemism for pushing private investors to take losses.
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