Saturday 25 February 2017

Greek finance chief says austerity reforms are solving debt crisis

Donal O'Donovan

Donal O'Donovan

Greek finance minister George Papaconstantinou. Photo: Getty Images
Greek finance minister George Papaconstantinou. Photo: Getty Images

EUROPEAN leaders are at last making an effort to sing from the same hymn sheet regarding the Greek and European debt crisis.

Last night, as political leaders descended on Paris for a meeting of the OECD, the Greek finance minister George Papaconstantinou said a restructuring of his country's debt would not solve its problems. He said the European debate on the matter was "dangerous."

The Greek finance minister, who is under pressure at home from anti-austerity protesters, was at pains to point out that his government's economic reforms were working. The Greek economy was adjusting and the country wasn't contemplating leaving the euro, he added.

"Europe needs to give clear response if it wants to preserve eurozone," he said at the IRIS thinktank in Paris.

"What we've created is imperfect, but is much better than what went before.

"It benefits not just the weakest, but the strongest countries as well."

European Union Economic and Monetary Affairs Commissioner Olli Rehn said the EU had managed to contain the crisis to Greece, Ireland and Portugal.

Mr Rehn was speaking at a forum in Paris organised by the OECD.

He admitted, however, that Greece was the "most difficult case" among the three countries that had received bailouts from the EU and the IMF. Both sets of comments were in line with the ECB, which is determined to stamp out any talk of a restructuring of Greek debt, at least in the near term.

The ECB has been criticised for trying to delay a default only because of the effect that might have on the bank itself.

The ECB holds €75bn of Greek, Irish and Portuguese government bonds and would be hit if any one of the three reneged on its debts.

However, analysts also point out that the ECB has played an important role in preventing a default until now at considerable cost to itself by keeping lending lines to banks across Europe open and buying government bonds. (Additional reporting Bloomberg).

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