The Greek government confirmed it will not restructure the debt and budget cuts are no longer necessary to achieve the fiscal targets set in the program agreed emergency funding with the European Union (EU) and the International Monetary Fund (IMF).
“Greece will not require additional steps, especially the painful measures (budget cuts). I only see one option in the future, ie achieving the set targets,” said Finance Minister George Papaconstantinou Eleftherotypia as quoted from Reuters, Sunday (30 / 5 / 2010).
Greece, previously obtained a loan of funds (bailout) of 110 billion euros, equivalent to USD134 billion in order to avoid default (default) for the debt which had by that country. In return, Yunanai promised to reduce its budget deficit to three percent in 2013 from gross domestic income (GDP). In fact, now the Greek deficit reached 11 percent.
As a result, the market became concerned with the Greek step ‘mengecangkan belt’ is a significant. And it is also expected to lead the country plunged into a deeper economic recession and threatening to meet fiscal targets, and to extend the country’s debt crisis.
Bank of Greece instead projecting the economic downturn will be deeper. Where GDP is estimated to still be experiencing a contraction of up to four percent in 2010 if the government increased its tax revenue and cut their salaries and pensions as a shortcut.
“Economic recession will be on the deepest level in the year 2010 and beyond this there will be a gradual recovery. I remain optimistic and believe that we will recover quickly,” said Greek Finance Minister.
It reaffirms the socialist government’s attitude on the debt restructuring is not an option, either now or in the future.
“The debt restructuring will be a disaster for the credibility of the state. This will cause the marginalization of the capital markets, even more belt tightening will cause a very deep recession,” he said.
He said Greece could rely on the EU and the IMF program for the financing needs without having to return to the market for a loan before the first quarter of 2012. “The government has shown not counting the political cost when it comes to what needs to be done for the good of this country,” said Papaconstantinou
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