Greece must avoid debt restructuring
By Harry Papachristou |
May 23, 2011, Monday
|
Print Edition
Print Edition
GREECE must avoid debt restructuring and push on with budget cuts and privatization to overcome its debt crisis, Prime Minister George Papandreou and senior ECB officials said on Saturday.
Papandreou must present a fiscal plan this week that is credible enough for the European Union and the International Monetary Fund to continue bankrolling his debt-laden country.
But a large majority of Greeks reject more austerity, according to a poll published on Saturday, which also shows the ruling socialists losing their lead versus the conservative opposition for the first time since their 2009 election victory.
"Debt restructuring is not under discussion," Papandreou said in an interview in Sunday newspaper Ethnos.
One year into its EU/IMF 110-billion euro (US$156 billion) bailout, Greece is struggling with weak revenues and deep recession, fuelling speculation that it will have to restructure its debt to pull itself out of the fiscal mess that triggered a eurozone crisis.
The chairman of the 17-country Eurogroup, Jean-Claude Juncker, said last Tuesday Greece may have to move toward a "soft restructuring" of its debt.
But the European Central Bank remains strongly opposed to such a move, due to fears that it would destabilise the euro.
Greece has no other option but to follow through its fiscal plan, ECB governing council member Ewald Nowotny told Greek newspaper To Vima on Saturday. "For the ECB, the line is one and clear: you have to implement the commitments you have made."
In a separate interview in newspaper Kathimerini, ECB executive board member Juergen Stark said any kind of debt restructuring would thwart the country's return to bond markets and undermine reforms. "We are at a critical juncture, what it really takes now is action," Stark said.
Last Friday, Fitch became the second ratings agency to warn that it would consider any kind of debt restructuring as a sovereign default - exactly the kind of outcome eurozone governments want to avoid.
Asked by Ethnos if he would consider a debt "reprofiling" rather than a restructuring, Papandreou said: "We are looking after our job... We do not join the public discussion about such scenarios."
Greece is considering deeper cuts in public sector wages and further tax increases on a range of products and professions to qualify for more aid, Greek newspapers said on Saturday.
The plan may include scrapping bonuses to civil servants and employees in state-run companies, newspapers Ta Nea and Isotimia reported, without citing any sources.
Papandreou vowed to take any measure necessary to secure more funding for his country.
Papandreou must present a fiscal plan this week that is credible enough for the European Union and the International Monetary Fund to continue bankrolling his debt-laden country.
But a large majority of Greeks reject more austerity, according to a poll published on Saturday, which also shows the ruling socialists losing their lead versus the conservative opposition for the first time since their 2009 election victory.
"Debt restructuring is not under discussion," Papandreou said in an interview in Sunday newspaper Ethnos.
One year into its EU/IMF 110-billion euro (US$156 billion) bailout, Greece is struggling with weak revenues and deep recession, fuelling speculation that it will have to restructure its debt to pull itself out of the fiscal mess that triggered a eurozone crisis.
The chairman of the 17-country Eurogroup, Jean-Claude Juncker, said last Tuesday Greece may have to move toward a "soft restructuring" of its debt.
But the European Central Bank remains strongly opposed to such a move, due to fears that it would destabilise the euro.
Greece has no other option but to follow through its fiscal plan, ECB governing council member Ewald Nowotny told Greek newspaper To Vima on Saturday. "For the ECB, the line is one and clear: you have to implement the commitments you have made."
In a separate interview in newspaper Kathimerini, ECB executive board member Juergen Stark said any kind of debt restructuring would thwart the country's return to bond markets and undermine reforms. "We are at a critical juncture, what it really takes now is action," Stark said.
Last Friday, Fitch became the second ratings agency to warn that it would consider any kind of debt restructuring as a sovereign default - exactly the kind of outcome eurozone governments want to avoid.
Asked by Ethnos if he would consider a debt "reprofiling" rather than a restructuring, Papandreou said: "We are looking after our job... We do not join the public discussion about such scenarios."
Greece is considering deeper cuts in public sector wages and further tax increases on a range of products and professions to qualify for more aid, Greek newspapers said on Saturday.
The plan may include scrapping bonuses to civil servants and employees in state-run companies, newspapers Ta Nea and Isotimia reported, without citing any sources.
Papandreou vowed to take any measure necessary to secure more funding for his country.
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