Greek FM says no risk of nation defaulting on debt
Greek FM says no risk of nation defaulting on debt
08:21, December 10, 2009 
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Greek Finance Minister George Papaconstantinou said there is "absolutely" no risk that the country will default on its debt, seeking to ease the concerns of investors after Greece had its credit rating cut on Tuesday.
"We're moving swiftly to reassure citizens and markets that we're moving in the right direction," Papaconstantinou said. The minister also said that Greece will not seek a European Union aid package.
Fitch Ratings cut Greece one step to BBB+, the third-lowest investment grade, a day after Standard & Poor's put Greece's A- rating on watch for a possible downgrade, signaling it may be reduced within two months. The ratings companies cited concern the nation may struggle to meet its debt commitments as public finances deteriorate. Greece has the highest budget deficit in the 27-nation EU.
Greek 10-year government bonds fell. The difference in yield, or spread, over German bunds widened 7 basis points to 228 basis points as of 8:43 am in London. Greece's Athens Stock Exchange General Index declined for a third straight day, falling 2.3 percent, with National Bank of Greece SA, the largest lender, losing 4.4 percent to 17.4 euros.
Papaconstantinou said there is no risk to the Greek banking system as the banks are "fundamentally sound".
Greece's socialist government, elected in October, plans to cut the budget deficit to 9.1 percent of gross domestic product next year from 12.7 percent this year. Papaconstantinou, an economist with studies from the London School of Economics and 10 years at the Organization for Economic Cooperation and Development, is fending off criticism from the European Union and investors that he is not doing enough.
The Greek government budget plans, including one-off measures and a partial freeze on public-sector pay, "are unlikely by themselves to alter Greece's medium-term fiscal dynamics" given the prospects of high deficits, debt and sluggish economic growth, S&P said.
Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since World War II.
"It's five minutes to midnight for Greece," Buiter said. "We could see our first EU 15 sovereign default since Germany in 1948."
Source: China Daily
"We're moving swiftly to reassure citizens and markets that we're moving in the right direction," Papaconstantinou said. The minister also said that Greece will not seek a European Union aid package.
Fitch Ratings cut Greece one step to BBB+, the third-lowest investment grade, a day after Standard & Poor's put Greece's A- rating on watch for a possible downgrade, signaling it may be reduced within two months. The ratings companies cited concern the nation may struggle to meet its debt commitments as public finances deteriorate. Greece has the highest budget deficit in the 27-nation EU.
Greek 10-year government bonds fell. The difference in yield, or spread, over German bunds widened 7 basis points to 228 basis points as of 8:43 am in London. Greece's Athens Stock Exchange General Index declined for a third straight day, falling 2.3 percent, with National Bank of Greece SA, the largest lender, losing 4.4 percent to 17.4 euros.
Papaconstantinou said there is no risk to the Greek banking system as the banks are "fundamentally sound".
Greece's socialist government, elected in October, plans to cut the budget deficit to 9.1 percent of gross domestic product next year from 12.7 percent this year. Papaconstantinou, an economist with studies from the London School of Economics and 10 years at the Organization for Economic Cooperation and Development, is fending off criticism from the European Union and investors that he is not doing enough.
The Greek government budget plans, including one-off measures and a partial freeze on public-sector pay, "are unlikely by themselves to alter Greece's medium-term fiscal dynamics" given the prospects of high deficits, debt and sluggish economic growth, S&P said.
Former Bank of England policy maker Willem Buiter said Greece may be the first major country in the European Union to default on its debts since World War II.
"It's five minutes to midnight for Greece," Buiter said. "We could see our first EU 15 sovereign default since Germany in 1948."
Source: China Daily
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