Brussels, 18/05/2011 (Agence Europe) - On Wednesday 18 May 2011, Lorenzo Bini Smaghi, a member of the European Central Bank (ECB) Governing Council, rejected the idea of re-scheduling repayment of Greece's national debt to give the country more time. He is reported by Dow Jones as saying that he oppose the idea that has been mooted of a slight re-jigging of Greece's debt because of the negative impact that would have on Greek banks, which would have to drum up new cash under difficult conditions on the money markets.
After the ECOFIN Council meeting on Tuesday 17 May 2011, EU Economic and Monetary Affairs Commissioner Olli Rehn suggested that it could be decided along the lines of the measures for Portugal to ensure private investors in greets keep their investment in the country, but ruled out the idea of 'restructuring' the country's debt. Upon a request from Finland, when endorsing the Portuguese austerity programme, the ECOFIN Council demanded that Portugal encourage private investors to pledge to keep their investments in the country (see EUROPE 10380). Rehn said that extending the maturity of the loans - 'voluntary re-scheduling in financial terminology - could be considered in such a situation. On Monday, the chair of Eurogroup, Jean-Claude Juncker, opened the door to re-scheduling of Greece's debt but no decisions will be made until the international fact-finding mission in Athens publishes its report. Both Rehn and Juncker stressed the importance of ensuring in advance of any such decision that structural reforms are introduced in Greece more speedily and a privatisation programme is launched to bring in 50 billion euros over five years. Rehn said that Greece raising 15 billion euros in 2011 and 2012 is a necessary precondition for any further moves. He demanded additional measures to reduce public spending by more than 20 billion euros this year. On Thursday 19 May, the Greek government will be unveiling its new budget strategy to meet the austerity programme targets (cutting the public deficit this year to 7.5% of GDP - despite the fact the Commission forecasts 9.5%). The Greek government has commissioned private consultants to help prepare the privatisation programme. (M.B./transl.fl)