Trichet rules out debt hair­cut

ECB pres­i­dent calls on Greece to stick to stream­lin­ing pro­gram, seen as way to re­store its cred­i­bil­ity

Kathimerini English - - Business & Finance -

Greece should stick to the terms of mem­o­ran­dum it has signed with its cred­i­tors re­li­giously, Euro­pean Cen­tral Bank Pres­i­dent Jean-Claude Trichet stressed yes­ter­day, while brush­ing aside any sug­ges­tion of a Greek debt re­struc­tur­ing.

“I was quite clear in my mes­sage about fis­cal ad­just­ment. It [ap­plies to] all coun­tries [con­cerned] and of course Greece, too,” Trichet said. “The key to cred­i­bil­ity re­mains the strict ap­pli­ca­tion of the fis­cal ad­just­ment. We have a plan. We ap­ply the plan and [re­struc­tur­ing] is not part of the plan,” he con­tin­ued.

“What we con­sider im­por­tant is the ef­fort for fis­cal stream­lin­ing and there is a fis­cal plan that we are ask­ing to be ap­plied,” the ECB head added.

Sources sug­gest that the ECB has made it known to all con­cerned that if any form of debt re­struc­tur­ing is de­cided upon, it will stop ac­cept­ing Greek bonds, which banks use to ob­tain fund­ing. Asked what the pos­si­ble dam­age would be to the ECB from a pos­si­ble debt re­struc­tur­ing within the eu­ro­zone, Trichet coun­tered that “this is not the prob­lem.”

Athens was happy to hear yes­ter­day that the ECB will not raise in­ter­est rates as fast as the mar­ket had ex­pected.

The In­ner Cabi­net de­cided yes­ter­day that the midterm fi­nan­cial sta­bil­ity pro­gram will be tabled in Par­lia­ment by May 18. “All par­lia­men­tary pro­ce­dures will be fol­lowed and it will be voted with a sim­ple ma­jor­ity,” gov­ern­ment spokesman Gior­gos Pe­talo­tis said.

Apos­to­los Tam­vakakis, man­ag­ing di­rec­tor of Na­tional Bank of Greece, told en­trepreneurs and clients at Ioan­nina that “a debt hair­cut does not con­sti­tute an al­ter­na­tive be­cause it would sig­nify the coun­try’s de­struc­tion, tak- ing it back decades.”

He added that “such dis­cus­sions do not do any good” and pro­posed that “what we should do is fo­cus our ef­forts on the fis­cal ad­just­ment and re­form of the coun­try’s econ­omy.” He then es­ti­mated that “we can and we should suc­ceed; we will make it.”

In Ger­many, Der Spiegel mag­a­zine ar­gued yes­ter­day that Por­tu­gal should avoid Greece’s er­rors, while news­pa­per Die Zeit es­ti­mated a Greek debt re­struc­tur­ing would cost Ger­man banks about 40.6 bil­lion eu­ros, ac­cord­ing to an eco­nomic re­search in­sti­tute in Dus­sel­dorf.

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