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Imposing bond losses would be big mistake -- Greece

Restructuring Greece's massive debt would be a "huge mistake" that would freeze it out of bond markets for another 10-15 years, Finance Minister George Papaconstantinou said yesterday.

Imposing losses on Greek bonds would not solve the country's financial problems, Mr Papaconstantinou told state-run NET television.

Eurozone member Greece is covering expenses with the help of international bailout loans worth €110bn till mid-2013, but remains under heavy market pressure with its economy stuck in recession and national debt set to exceed 150pc of gross domestic product this year.

Yields on 10-year Greek bonds are currently at nearly 16pc, compared to the benchmark German rate of 3.25pc.

"A restructuring, a bond haircut, would be a huge mistake for the country . . . it would carry a big cost and no benefit, and it would keep us out of the markets for 10-15 years," Mr Papaconstantinou said.

Inspectors from the bailout-loan providers -- the European Union and International Monetary Fund (IMF) -- are due in Athens on Tuesday for a quarterly review of the Greek austerity program.

The government has promised to take Greece out of recession and return to raising money on the bond markets next year to meet financing needs.

Mr Papaconstantinou said he favoured a second extension of rescue loan repayment, just weeks after the original terms of the deal were improved. The repayment schedule was extended from three to seven and a half years and the average interest rate cut by one percentage point to around 4pc.

Meanwhile, Greece's cash-strapped government has promised to raise an additional €11.8bn by the end of 2013 via a crackdown on tax evasion, and indicated it could seek a second extension of its bailout loan repayment.

Mr Papaconstantinou outlined the tax crackdown, which includes the appointment of a former terrorism prosecutor to the effort, a year after Greece was rescued from the brink of bankruptcy by a €110bn bailout package from the European Union and IMF.

He also suggested Athens would welcome a second extension in the repayment schedule for the loan.

"I expressed the hope that we could have an even better arrangement regarding the repayment of the €110bn," Mr Papaconstantinou said.


Irish Independent