Greece not discussing debt restructuring
Greece will weather its debt crisis, helped by seven billion euros from privatisations, and is not discussing debt restructuring with creditors, Finance Minister George Papaconstantinou told Reuters on Tuesday.
January 05, 2011 / 12:37 IST
Greece will weather its debt crisis, helped by seven billion euros from privatisations, and is not discussing debt restructuring with creditors, Finance Minister George Papaconstantinou told Reuters on Tuesday.
The country, whose fiscal woes sparked the euro zone crisis last year, has cut debt and delivered reforms to meet the terms of a 110 billion euros (USD 147 billion) EU/IMF bailout and is not in talks with bond holders on extending repayment of outstanding debt."There are no such discussions," Papaconstantinou said, denying reports Greece was in talks with commercial banks. "This would not help Greece, it would not help the Greek economy, the Greek banks, the Greek citizens or the European problem."The minister said Greece was making solid progress in plugging its gaping budget hole and pushing on with unpopular reforms, ensuring the fourth, 15 billion euros tranche of the emergency funding will be disbursed in March."We are closing 2010 on target, the reforms are on schedule," he said. "There is no reason for me to doubt the next tranche or any other tranche as long as we do our job right."Privatisation proceedsGreece is introducing sweeping reforms, including toughening laws against rampant tax evasion, liberalising the labour market and opening up professions, and privatising state assets as part of its bailout deal.Papaconstantinou said he was expecting revenues of one billion euros from the sale of state assets this year, and another six billion in 2012-13, including airports, utilities and real estate, as well as the sale of numerous betting licenses."Our process is very flexible. We do have a revenue goal but what is more important is the expertise the investment and the push the private capital will bring to those sectors," he said.Greece's economy, plunged into its worst recession in 17 years, is expected to contract by 3% this year and return to growth in 2012 on what the minister said were encouraging signs from exports.Implementing tough austerity measures, Greece cut its deficit to 9.4% of GDP last year and wants to bring it down to 7.4% in 2011.But its total debt is expected to rise to 152.6% of GDP this year from 142.5% in 2011.Return to bond markets Greece is sticking to its plan to return to bond markets sometime in 2011, depending on market conditions, and also issue "diaspora" bonds to Greeks abroad, Papaconstantinou said.Greece has been effectively shut out from debt markets by spiralling borrowing costs -- the spread of 10-year Greek bonds compared to benchmark German Bunds was 987 basis points on Tuesday -- but the minister said he hoped sound fiscal policies would restore credibility among investors.He said discussions with China on buying Greek bonds, as agreed during a visit to Athens by Chinese Prime Minister Wen Jiabao in October, were progressing but could say nothing about the amount or timing of any purchases.The EU would discuss extending the repayment term of the emergency loan to Greece in January, to avoid a hump in 2014-15 and be more in line with Ireland, the second euro zone country to request help."We would like the lengthening to cover the entire (bailout) not only the part that has not been disbursed but also the part that has been disbursed. This is something that the Commission is positive about, we have to wait for the final decision by the Eurogroup," Papaconstantinou said.He added he was confident the EU would come to an agreement on the issue of joint euro zone bonds in the near future and that the bloc would make the right decisions to exit the debt crisis.E-bonds would effectively mean all 17 euro zone countries financing a portion of their debt together and sharing a credit rating, something Germany has strongly opposed."I'm absolutely confident for a very simple reason. Even though we are often late in reacting, I think that one thing we can all be absolutely sure about is that the EU always rallies and always finds the solutions to preserve its own construction which is the common currency," Papaconstantinou said. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
