Antonis Samaras, Greek prime minister, and Angela Merkel, German chancellor, meeting in Athens, Oct 09, 2012.

The Greek government is set to get its €34.4bn delayed bailout payment soon after its bond buyback program geared towards cutting €21.1bn from the country's sovereign debt, just fell short of target.

Greece on Tuesday night had received offers from private investors to sell €32bn in bonds back for an average of 33.5 cents in the euro - -  effectively agreeing to a 66.5% haircut on their holdings.

Greece borrowed €10bn to execute the buyback, with the aim of reducing its public debt by €21.1bn. The average offer to buy back the bonds was 33.8% of the principal amount. So Greece needs to spend €11.2bn in total.

Greece’s lenders had estimated that the country’s debt would be cut by 11% but it will now be less than 10% and last night Eurozone finance ministers discussed the issue in a teleconference on how to reduce the ratio to GDP from 126.6% to 124%, which the International Monetary Fund had set as a benchmark in order to continue participating in the Greek program. Without the relief, Greece’s debt would have stood at 144% of GDP by the end of the decade, which the IMF considers unsustainable.

The issue is due to discussed at Thursday’s Eurogroup meeting in Brussels.

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