World Business

Greek government rules out debt restructure

(Xinhua)
Updated: 2010-05-31 09:42

ATHENS: Greece does not intend to restructure its national debt in the near future or postpone payments to holders of Greek state bonds in the long-term future, Greek Finance Minister George Papaconstantinou said.

In an interview published in Eleftherotypia newspaper on May 30, Papaconstantinou expressed his confidence that the country will meet the targets agreed with the other European partners and the International Monetary Fund (IMF) to reduce its enormous budget deficit.

Greek protestors hold a banner with "Our needs are thrown down the cliff. We will not pay for their mistakes" during an inspection by Greek President Karolos Papoulias on the Acropolis Hill in Athens, May 25, 2010. The short-term contract employees demanded back pay and more job positions. [Xinhuanet.com]

"A debt restructure is not an option, as it would be catastrophic for our credibility. It would lead to marginalization from capital markets, more austerity measures and deeper recession," said the minister.

He stressed that no more austerity measures will be introduced in order to achieve the set goals.

"Greece will not need additional measures, especially more painful measures. There is only one option ahead and that is to meet the targets," said Papaconstantinou.

Greece secured a 110 billion euro ($135 billion) financial aid package a few weeks ago to meet its financing obligations and avoid a default.

In exchange, the Greek government pledged to fully implement the measures and the structural reforms in order to reduce the budget deficit from the current 13.6 percent of GDP to less than 3 percent in three years.

Papaconstantinou noted that this year will be the most difficult for Greece, as the country will be in recession but he also expressed optimism that a recovery will start soon.

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Despite the harsh measures, the minister added, Greek people understand the need for changes and "sees that there is money available in Greece, money not declared to the Tax Office and money spent unreasonably."

Papaconstantinou's comments were made before three groups of auditors from the European Union and the IMF are due to arrive in Athens by June 15 in the framework of the agreement with Athens to supervise the implementation of the measures and reforms.

According to unconfirmed information, the delegations reaching up to 50 members will probably set up their offices in the Greek Finance Ministry or the Bank of Greece and will cooperate with the Greek government on the fight against tax evasion and the efforts to reduce state expenses. IMF will reportedly focus on waste of funds in social security and health care.