Athens rebuffs European ?cacophony?

Finance Minister Giorgos Papaconstantinou responded on Wednesday to growing speculation that Greece will be forced to default by saying that the country can deal with its mountain of debt and insisted that renewed access to bond markets is still possible in 2012.

?I believe that Greece’s debt is absolutely sustainable… But that is based on the implementation of the [2011-15] adjustment program,? he told reporters.

Papaconstantinou spoke as the country’s borrowing costs remained high on speculation that Greece will have to restructure its debts. The difference between the interest rates on Greek and German 10-year bonds is over 11 percentage points.

Papaconstantinou again denied that restructuring is on the cards.

?It is a very interesting debate but we don’t care to join in,? he said. ?[Restructuring] would carry great dangers for the economy, [pension] funds and households.?

The spike in Greek borrowing rates, he argued, was due to a ?cacophony? of conflicting statements by European finance officials on the restructuring issues.

As yields on Greek government bonds have hit new highs, some German officials and a growing number of analysts have expressed doubt that Athens would be able to go back to markets next year as planned under its bailout agreed to with the European Union and the International Monetary Fund.

The latest came from a member of German Chancellor Angela Merkel’s council of economic advisers, Lars Feld, who said on Wednesday that Greece will probably have to restructure its debt and that bond buybacks are a possible solution.

Papaconstantinou said the government expected bond spreads to ease after the summer once a bailout loan with troubled Portugal is hammered out.

?I think the Portugal deal will get done and after the summer the picture in the markets will look quite different,? he said.

Unless Greece’s borrowing costs ease it’s going to be very difficult for the country to be able to tap long-term investors for cash by next year.

?Our intention remains to [return] to the markets as soon as possible and by early 2012 at the latest,? he said.

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