FinMin: Next moves discussed at Luxembourg meeting

Finance minister George Papaconstantinou said that the next moves, due to Greece's need to secure 27 billion euros in 2012 and a corresponding or larger amount in 2013 in the event that it has not managed to return to the international markets by then, was the subject discussed at an extraordinary informal meeting called Friday evening in Luxembourg by Eurogroup president Jean-Claude Juncker.
In a statement, Papaconstantinou said that "what we discussed was the course of the (economic) program in a conjuncture in which the markets continue to be disbelieving towards Greece and in which we must also plan our next steps for 2012 and 2013 so that Greece will be able to either return to the markets or make use of the European Council's recent decision enabling the EFSF (European Financial Stability Facility) to purchase bonds".
The minister noted that "the difficulties are well-known, we will continue to have difficulties, we know that the economic situation in our country is tough, but we are moving ahead with absolute determination to complete the task that we have commenced", and stressed that the Athens government "has taken, continues to take and will take very decision necessary in order for the course of the country's salvation to continue".

Papaconstantinou further explained that meetings such as that in Luxembourg between Juncker and eurozone members are frequent and informal, and that is why they are not announced.

He added that the meeting was made public later because Greece's alleged exodus from the eurozone was published in a German magazine. "And if this story was not ridiculous, but also dangerous, it would not have been worth dealing with it. It is evident that such a matter was neither put forward, nor, naturally, discussed," he said.

"What we did discuss was the course of the Economic Policy Programme, on the course of which I was invited to the meeting in order to exchange views," Papaconstantinou added.

He said that the preceding week, the current week and the following week a regular periodic examination of the Economic Policy Program was taking place, in a conjuncture in which the markets continue to be disbelieving towards the country and in which the next steps for 2012 and 2013 must be planned, so that Greece will be able to either return to the markets or make use of the European Council's recent decision enabling the EFSF (European Financial Stability Facility) to purchase bonds".

As everyone very well knows, and above all the Greek citizens, the Greek government has taken and continues to take whatever decisions necessary in order for the course of Greece's salvation to continue, "and that is what I clarified yesterday (Friday)" at the meeting, Papaconstantinou added.

Greek 'euro exit' speculation denied

Finance minister George Papaconstantinou denied scenarios that Greece would leave the euro currency, in an interview with the Italian daily newspaper La Stampa.

Asked if it would be easier for Greece, as suggested in a controversial article in the German magazine Der Spiegel, that Greece leave the euro currency, Papaconstantinou replied "no, that is impossible".

"No, that is not possible. First of all because there is no mechanism for a country's exit from the euro. The consequences would be catastrophic: The fiscal deficit would double, the buying power would collapse, the banks would be hard hit, and we would fall into a war-period recession," Papaconstantinou explained.

"There is no sense for that, neither politically, socially or economy-wise. It would be a disaster which, in reality, no one desires, not even those who are professing such a prospect in the countries of the North. The analysts who last year were writing that we would default entertain me. Now they are writing 'OK, it did not happen, but you'll see, it will happen in the coming years'."

On restructuring of the state debt, Papaconstantinou said he continues to maintain that the cost of a restructuring largely outweigh any possible positive effects, warning that if Greece unilaterally imposed losses on holders of state bonds, the markets would exclude it for a very long time because the consequences to the banking system would be incalculable. He noted that all the relevant theories seeing the light of day concern countries which, in the past, were in a totally different situation, and added that in the case of Greece "one of the chief dangers would be a chain reaction of consequences for other countries".

The finance reiterated that only intensification of the streamlining measures, with the achievement of a primary surplus and return to growth can, in the medium-term, convince the markets.

On Greece's return to the international markets, Papaconstantinou noted that six months in a huge space of time, and expressed his belief that after the summer, when the streamlining and privatisations plan will have progressed, the markets will settle down.

An alternative, he continued, is that the ability exists for one to ask that a European Rescue Fund purchase our bonds from the primary market. "In this way, the 25 billion euros we need for 2012 could be covered by the European Rescue Fund"

"We will make it," the finance minister assured, but added that "otherwise, a parachute would exist".
Asked if Greece would be willing to make additional efforts if asked, Papaconstantinou noted that "many are forgetting that in 2010 we materialised the biggest effort to reduce the deficit in European history, and that in the midst of a crisis. We believe that the privatisations and the 26 billion euros will be sufficient from now up until 2015".

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