Greece rejected speculation that it will need a bailout to tackle the European Union’s biggest budget deficit as officials fly in from Brussels to scrutinize tax and spending plans.
“We don’t expect to be bailed out by anybody as, I think, is perfectly clear we’re doing what needs to be done to bring the deficit down and control the public debt,” Finance Minister George Papaconstantinou said in an interview with Bloomberg Television today.
Papaconstantinou is trying to buttress confidence in Greece’s fiscal plans after the ballooning budget deficit last month triggered a sell-off of the country’s bonds.
European Central Bank (ECB) Executive Board member Juergen Stark earlier spooked some investors about Greece’s vulnerability to default when Il Sole newspaper quoted him as saying the rest of the EU won’t rescue the country if its fiscal position worsens.
“Frankly we don’t need that clarification,” said Papaconstantinou. “There is no Plan B. Greece will do what it takes on its own devices. There will be no need for any outside help.”
The euro dropped as much as 0.5pc to $1.4282 after Stark’s remarks before recouping its losses. The yield on Greece’s 10-year government bond rose 4 basis points to 5.672pc.
Greece’s deficit-cutting strategy faces a credibility test today when EU officials arrive in Athens for a three-day fact-finding mission. Greece has pledged to cut its deficit to 8.7pc of gross domestic product this year from 12.7pc in 2009 and push it below the EU’s 3pc limit by 2012.
The European Commission won’t make its views public before Greece releases detailed plans later this month, EU spokeswoman Amelia Torres said. The ECB will be represented on the trip.
Papaconstantinou said today there are “absolutely” no discussions under way with other European governments about crafting a rescue package for Greece.
Greece’s deficit has prompted speculation from some investors that the rest of the EU would save the country from default if such a move were necessary.
German Chancellor Angela Merkel fanned such talk when she said December 10 that Europe has a “responsibility” to help Greece overcome its crisis, though she stopped short of laying out a course of action.