EU Commissioner Olli Rehn has said countries such as Ireland and Greece would get only temporary "relief'' by restructuring their debts.
Restructuring debts would not help to balance the annual budget deficit, he said. Giving loans via European institutions was the best way to avoid a Lehman-style meltdown, said Mr Rehn, who was speaking at an event organised by a Finnish pro-EU organisation
"If we can avoid another crisis like the Lehman situation with financial guarantees, as we have succeeded in doing so far, then the risks associated with loan and guarantee decisions have been in Finland's best interests,'' Mr Rehn said.
He was speaking as it emerged that Greece and Portugal had bigger-than-expected budget deficits last year, according to new figures from the European statistics agency Eurostat.
The statistics show Germany and France failed to live up to the Maastricht Treaty rules on sustainable budgets.
Ireland recorded the highest deficit of any European country at 32.4pc in 2010, according to the figures.
Most of the Irish deficit is made up of one-off bank bailout costs, and was expected. Excluding the banking bill, the Irish deficit is closer to 12pc, still the highest in the EU.
Last night's deficit figures for Greece and Portugal were worse than their governments had predicted.
The Greek deficit was 10.5pc of GDP in 2010. The Greek government had predicted a deficit of 9.4pc as recently as February.
Portugal's deficit also had to be revised upwards, to 9.1pc of GDP from the government's initial estimate of 7.3pc.
"These revisions are bad news in two respects. First, they imply that the task to bring the deficit down is much larger than initially envisaged. Second, they undermine the credibility of data on public finances in Portugal in particular and in peripheral countries in general," said Marie Diron, senior economic adviser to Ernst & Young. The latest revisions added to fears that the Greek debt position is unsustainable.