Debt restructuring not on the table for Greece: EU Commissioner

13:22, June 02, 2011      

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Debt restructuring is not on the table for Greece to overcome the sovereign debt crisis, said Olli Rehn, EU's Commissioner for Economic and Monetary Affairs on Wednesday in New York.

Rehn told members of the Council on Foreign Relations that a debt restructuring in Greece would have very negative impacts on EU's capital markets and bank system. Instead, he was more for a Vienna-style plan, in which banks would voluntarily maintain their exclosure to Greece and roll over the expiring bonds.

The top EU official said that Greece need to stick to its deficit cuts plan and also privatize government-owned businesses. "For Greece, there has simply been no choice to fiscal consolidation. "

For this context, Rehn thought Belgium in the 1990s offered a relevant example in showing Greece what to do to achieve primary surplus goals. At that time, Belgium cut deficit and eased debt burden by selling state-owned companies such as telecom giant Belgacom SA to qualify for membership in Euro zone.

Rehn said Greece was not likely to be able to gain access to market financing by early next year despite efforts since last spring, so " this calls for difficult decisions still in June".

According to him, the ongoing EU and IMF talks in Athens have made progresses especially on closing the fiscal gap of 2011 and launching a 50-billion euro privatization program.

"I am confident that the review can be concluded in the coming days." Rehn regarded the review was crucial for next steps in Greece.

In response to concerns over Spain's debt situation, which could cause domino effect in Europe, Rehn said Spain so far has the ability to convince the market with resilience and the Spanish bond yields didn't soar as the other debt-burdened member states.

Source: Xinhua
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