Greece's finance minister ruled out any restructuring of his country's crippling debt burden Wednesday but warned that even more budget cutbacks are needed to achieve EU targets over the coming years.
Greece avoided bankruptcy last year with a 110 billion euro ($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.
Finance Minister George Papaconstantinou said this "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 EU President Van Rompuy ruled out any restructuring of the country's estimated 340 billion euro ($492 billion) debt during a visit to Athens. However, he pressed Greece to see through the unpopular reforms.
Papaconstantinou, speaking during a banking conference in the Greek capital, insisted the country's economy had been through the worst and that growth may return in the second half 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 quarter was "the worst," 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."
Though he pointed to some economic improvements ahead, Papaconstantinou said more measures are needed to get the country's deficit below the eurozone limit of 3 percent of GDP — from the expected 17 billion euros at the end of this year, to 3 billion euros at the end of 2015.
With the country facing a roughly 8 billion euro increase in interest payments alone during that period, the country must take measures amounting to 23 billion euros to achieve those targets, Papaconstantinou said.
The government is to present its midterm fiscal plan in the coming days, the minister said, adding that they would not include any more across-the-board salary and pension cuts or sweeping tax hikes.
The targets can be met by a combination of restricting state payroll costs, limiting state enterprise deficits, better targeting of social welfare and cracking down on tax evasion and the avoidance of social security contributions, he explained.
"It can be done, and how exactly it will be done will be laid out in the midterm plan," Papaconstantinou said, adding that Parliament is to vote on the package in mid-May.
The austerity measures taken so far have sparked a string of labor protests, and on Wednesday striking employees at the state general accounting office blocked the entrance of the finance ministry in central Athens. Public sector workers are to stage a demonstration in central Athens in the evening.
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