NEWS

Restructuring speculation dogs Greece

Greece will prove doubters wrong by returning to growth and avoiding debt restructuring, Finance Minister Giorgos Papaconstantinou told reporters in Washington on Sunday in an attempt to douse growing rumors about Athens having to default and reports that the European Union and the International Monetary Fund may hold back on the next tranche of the country?s 110-billion-euro loan package because of delays to reforms.

?The pain and cost of restructuring would be bigger than the benefits,? he said after private talks with IMF Managing Director Dominique Strauss-Kahn at the sidelines of the IMF and World Bank annual spring meetings in Washington. ?Restructuring is not the position of the Greek government.?

Papaconstantinou added that the ?public discussion about the matter does not help the country.? His comments came just hours after former Prime Minister Costas Simitis suggested in an interview with To Vima newspaper that a ?well-prepared? restructuring would improve Greece?s position.

Strauss-Kahn backed Papaconstantinou?s position, saying that despite the fear on financial markets that Greece might default, there were no plans for restructuring its debt. ?Nothing has changed. Period,? he told reporters.

Just a couple of days after Athens presented the outlines of plans for further savings of 26 billion euros over the next four years and to raise 50 billion euros from privatizations, the IMF chief said that as long as Greece sticks to its program, restructuring would not be needed.

However, European Commission sources told Sunday?s Kathimerini that during a recent visit by officials from the EC, the European Central Bank and the IMF to Athens, Papaconstantinou raised the issue of extending the maturities on all of Greece?s debts of about 340 billion euros, not just the 110 billion euros it has borrowed from the troika.

Sources also suggested that Greece could be in danger of missing out on the next loan installment if it does not pick up the pace of reforms.

The Wall Street Journal on Sunday quoted two unnamed sources that claimed Greece had suggested the idea of restructuring to the troika but that the EC and the ECB had turned it down because of fears that it could have a negative knock-on effect in other eurozone countries.