Greece: Can keep borrowing from markets

[March 23, 2010]  ATHENS, Greece (AP) -- Greece will have no difficulty in raising money on financial markets in the coming months, even at high interest rates, but hopes a commitment of support from the EU will help lower borrowing costs, Finance Minister George Papaconstantinou said Tuesday.

The country has around euro20 billion ($27.1 billion) of debt maturing over the next couple of months and has repeatedly said it wants to avoid paying sky-high premiums to raise money from international bond markets. It has announced a harsh euro4.8 billion ($6.5 billion) austerity plan designed to bring down its massive deficit and persuade financial markets it can deal with its debt crisis.

But markets have so far been unconvinced, and Greece faces borrowing costs that are double those of Germany's.

Papaconstantinou insisted Athens does not want a cash bailout.

"I want to make something very clear: Greece has not asked funding from anyone. We know very well that the problems of Greece are our own problems," he said during a financial conference in Athens, adding that "the way to borrow at good rates is for us to faithfully follow our (austerity) program."

The government has said that unless it can borrow at more reasonable rates, it might have to turn to the International Monetary Fund for help. It has said that the outcome of a European Union summit in Brussels Thursday and Friday will be crucial.

Athens is seeking details of a plan for help should it become necessary, in order to convince markets that it will not be allowed to default. Such a blueprint could boost market confidence and therefore reduce Greece's borrowing costs.

Papaconstantinou said the discussion in Brussels "is based on the decision by EU leaders that the stability of the eurozone must be defended by all means," adding that he hoped it would have a "positive outcome."

"But regardless of this outcome, Greece will be totally able to continue borrowing without difficulty from the international markets, and fulfill its borrowing needs -- and we will do this," Papaconstantinou said.

He stressed that he did not want to predict the outcome of the summit, but that the discussion was not only about Greece, but about the future of Europe's joint euro currency.

"There is a debate in progress, a debate that is quite complicated," he said. "This is not only a debate about Greece, but also about the future of the euzorone, about the euro. Greece is not coming to this debate as a beggar, under any circumstances."

German reluctance over bailing out Greece has raised the chances that Athens could be forced to turn to the IMF.

French and Luxembourg politicians said Monday that European Union nations are now discussing a combination of bilateral loans from individual eurozone countries who want to contribute -- and IMF aid for Greece if it needs it.

Eurozone governments said last week they would provide Greece with support, likely bilateral loans, if necessary.

The unusually public divide between German Chancellor Angela Merkel and EU officials backed by France over how to help Greece has kept investors on edge ahead of Thursday's Brussels meeting.

In an effort to reduce its massive budget deficit, estimated at 12.7 percent of economic output for 2009, the government has announced a harsh euro4.8 billion ($6.5 billion) austerity plan that is to cut civil servants' pay, hike taxes and freeze pensions.

The Cabinet was to put the final touches Tuesday to a tax reform bill that includes tax hikes and changes in income tax brackets, before submitting it to Parliament for discussion.

Unions strongly oppose the new measures, which have cut civil servants' pay and hiked taxes. Lawyers walked off the job Tuesday for the rest of the week, objecting to their being included in professions obliged to pay Value Added Tax.

[Associated Press; By DEREK GATOPOULOS]

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