PM insists debt is manageable

Prime Minister George Papandreou took the stage in Davos, Switzerland, on Thursday in an attempt to reassure markets that Greece won?t skip out on its debt, finding support from billionaire investor George Soros.

Papandreou ruled out defaulting on or restructuring Greece?s huge public debt but said he expected rescue loans from the European Union and International Monetary Fund to be stretched out and the interest rate reduced. He told global business leaders at the World Economic Forum that Athens hoped to return to capital markets even this year after implementing draconian austerity measures to slash its budget deficit.

?Of course the question of restructuring has been around. I can say that we?re not going to default. I also say we?re not moving to restructuring,? he said. ?Yes, there will be a lengthening of the debt we have to the IMF and the EU, and there has been discussion about the terms of the loans. I think these are in the pipeline,? he said.

Papandreou?s comments come after a Bloomberg poll released on Wednesday showing that most global investors predict at least one nation will leave the euro area within five years and that Greece and Ireland will default.

The Bloomberg Global Poll found that 59 percent of respondents think one or more of the 17 euro nations will quit by 2016, including 11 percent who see an exit within 12 months.

In another sign that investors see Greece fighting a losing battle, the Vienna Insurance Group, Eastern Europe?s largest insurer, admitted to writting off around 25 percent the face value of Greek government bonds in its investment portfolio.

Meanwhile, billionaire investor Soros said Greek debt ?might? be worth buying although he does not trade as he was confident Greece will do whatever it needs to stay in the eurozone.

When asked if he would buy Greek debt at the current spread levels, Soros told Reuters: ?I was thinking about it actually. I think Greece will do whatever it takes because Greece can?t afford to fall out. It has such benefits from being able to use the credit of the European Central Bank for repo so Greece will do what it needs to do.? Asked if he might be a buyer, Soros said, ?You might,? adding that he did not trade.

Greece has said it would reduce its budget deficit this year to 7.4 percent of gross domestic product from an estimated 9.4 percent in 2010 through welfare cuts, tax reforms and savings on public sector wages.

?I think Greece will fulfill the conditions that the European Central Bank imposes in order to be in… the euro,? Soros said.

?I am confident Greece will pull through although there will be some moments when there?s pressure put on Greece from the European Union. The attraction of meeting the conditions are so great there is really no viable alternative.?