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Greece insists debt restructuring not on the cards

By Elena Becatoros

Associated Press

Published: Wednesday, April 13 2011 3:20 a.m. MDT

Greece's finance minister George Papaconstantinou delivers a speech at the asset management and private banking of the Financial Times in Athens, Wednesday, April 13, 2011. Papaconstantinou said that while many analysts support the idea of changing the repayment terms, "the government does not agree" with the idea. Greece avoided bankruptcy last year with a euro 110 billion rescue loan package from its European copartners and the International Monetary Fund.

Thanassis Stavrakis, Associated Press

ATHENS, Greece — Greece's finance minister once more ruled out any restructuring of his country's crippling debt burden Wednesday, following similar statements by EU President Herman Van Rompuy a day earlier.

Greece avoided bankruptcy last year with a €110 billion ($160 billion) rescue loan package from its European partners and the International Monetary Fund. In return, the Socialist government slashed pensions and civil servant salaries, while increasing taxes and retirement ages.

But many analysts believe the country will eventually be forced to restructure its debt — which means easing the terms of its loan repayments, to the detriment of international creditors — regardless of whether it implements all the reforms it has promised.

This, Finance Minister George Papaconstantinou said, "is a position that has quite a few supporters, analysts. It is a position with which the government does not agree."

His comments came a day after Van Rompuy, during a visit to Athens, ruled out any restructuring of the country's debt, but pressed Athens to see through the unpopular reforms.

Changing the repayment terms for the estimated €340 billion ($492 billion) burden "would create more problems than solutions," he said, adding that "not only is (restructuring) not on the table, it is out of the question."

Papaconstantinou, speaking during a banking conference in the Greek capital, insisted the country had hit the worst of its recession at the end of last year, and that data showed a "timid" recovery had begun, with an expected return to growth towards the end of this year.

"When you are in the depth of recession, you don't necessarily see the light. You think things will continue to be black forever," he said. "But if one looks at what happened in the eurozone in the past few years, one will see that the recession was followed by recovery."

The last three months of 2010 "was the worst quarter," the minister said. "The first quarter of 2011 will be better, the second even better and from the third or fourth quarter we will pass to positive (growth) rates."

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