NEWS

Greece, IMF deny German report about restructuring

Greek Finance Minister Giorgos Papaconstantinou has insisted that the government is not planning to restructure its debt following a report in German magazine Der Spiegel that the International Monetary Fund is pressuring Greece to ease its debt burden.

Speaking to Reuters at a conference in Italy on Saturday, Papaconstantinou responded to Der Spiegel?s report by saying: «There is absolutely no chance of a restructuring of Greek debt.”

He added, «People (who talk about a restructuring) fail to understand that the costs would much outweigh the benefits.”

Earlier, the IMF had also denied the German magazine?s report.

“As we have said consistently, the IMF supports the Greek government’s position of no debt restructuring and its determination to fully service its debt obligations. Any reports claiming otherwise are wrong,» an IMF spokeswoman told Reuters.

Without citing any sources, Der Spiegel reported that the IMF had reversed its previous opposition to the idea of a Greek restructuring and now believed one was necessary soon.

Since the IMF now believes current measures no longer suffice, it would like to see interest rates on Greek sovereign debt lowered, maturities extended or the amount of principal which Greece has to repay cut, Der Spiegel said.

It reported that the IMF was still not willing to call openly for a Greek restructuring out of fear this could increase market pressure on Portugal. Portuguese bond yields have soared in the last several weeks because investors think Lisbon may soon be forced to seek a bailout.

For some months now, officials in Athens and Brussels have insisted that there will be no restructuring.

“All support measures are in place, and there is no reason now to start thinking of this possibility of restructuring Greece’s debt,» said European Commission spokesman Jens Mester.

Papaconstantinou said on Wednesday that Athens might use some proceeds from state asset sales to buy back outstanding bonds from the market. Since market prices of its debt have dropped sharply below face value, this could have the effect of a restructuring.