Greek Long-Term Debt ‘Sustainability’ Is Key to Stability, Venizelos Says

Bloomberg
June 24, 2011

Greek Finance Minister Evangelos Venizelos said that reducing the country’s long-term debt is the key issue to be resolved to help bring stability.

“Long-term sustainability of debt is the issue on the table now because if this isn’t resolved everything else is insignificant,” Venizelos said in an interview with Alter television in Athens today. “Markets must be convinced that we have plugged the gaps” and the debt-reduction plan will lead to a sustainable debt load. “Public debt dynamics are the core of the problem,’ he said.

Prime Minister George Papandreou’s government is trying to rally support for a package of austerity measures worth 78 billion euros to go to parliament next week. European Union leaders made passage of the package a prerequisite for a new aid program to avert the euro-area’s first default.

Asked if the EU would really withhold a fifth tranche of aid if the medium-term plan isn’t voted through, Venizelos said that the systemic danger posed to the euro may mean EU leaders “give us the fifth tranche anyway, but that would be it.”

Failure to pass the austerity package would lead the EU to come up with mechanisms to “isolate” Greece, Venizelos said. Rather, Greece has a stronger negotiating position as part of the euro region, he said.

“The national choice is to stay in the euro zone,” he said.

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