Financial Times
April 18, 2011
Greece’s central bank governor said on Monday that fiscal and structural reforms had slowed but ruled out a debt restructuring as “neither necessary nor desirable”.
George Provopoulos said Greece should intensify efforts to implement reforms to improve competitiveness, warning that the economy was set to shrink by at least 3 per cent in 2011, on top of a 4.5 per cent contraction last year. A debt restructuring could still be avoided provided reforms got back on track, he said.
His comments came as yields on Greek bonds hit fresh euro-era highs amid reports the government had told its eurozone partners and the International Monetary Fund that it wanted to start discussions on extending debt maturities.
“[Restructuring] is not necessary because we can achieve our targets if we implement policies correctly,” Mr Provopoulos said. “It is not desirable because it would have catastrophic consequences for the ability of the government and the private sector to access markets.”
He added that “there would also be very negative consequences for pension funds, banks and individuals” who had invested in Greek government bonds.
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