Greece today again ruled out any restructuring of its soaring debt as EU, IMF and European Central Bank experts picked through a new three-year austerity budget coming this month.
The Greek government, which has received mixed results from unpopular economic policies agreed with its international creditors, is now pledging to cut its runaway deficit by some nine percentage points by 2015.
'Under no condition are we going to restructure the debt,' government spokesman George Petalotis said. 'We completely rule out this option because we know how damaging it could be,' he added.
Athens has consistently opposed the move for fear of destroying the country's fragile credibility with markets and to avoid placing major strain on the nation's banks, which are exposed to part of the state debt that has exploded to over €300 billion.
But the ruling party is now facing such calls from within its ranks from some arguing that current economic policy leads nowhere.
Many analysts believe that despite the government's persistent denials, Greece will be forced to renegotiate its debt with creditors before long. Athens has stopped issuing three or six month treasury bills, the limit of its exposure following its escape from insolvency last year when it was bailed out by the EU and International Monetary Fund.
The IMF has said it supports the government's decision against restructuring and the European Union again ruled out the prospect on Wednesday.
The tough new Greek austerity budget expected this month aims to bring the public deficit down to just 1% of Gross Domestic Product by 2015. The EU deficit ceiling is 3%.
Greece is under pressure to overhaul its economy with sweeping cuts in its chronically inefficient public sector but a draconian austerity drive enforced for the past year has so far fallen short of the expected results.
Painful cuts to wages and pensions, and a spending clampdown on state entreprises in 2010 succeeded in bringing down the budget deficit by more than five percentage points, substantial by any standards.
But the finance ministry has admitted that because of a deeper-than-expected recession, the 2010 deficit will still be higher than the official estimate of 9.4% of GDP. EU data agency Eurostat will release the final figure on April 26 but Greek media are already bracing for a deficit of more than 10%.
The slippage is expected to bring a new round of austerity measures that have already drawn criticism from government lawmakers in parliament while the cuts so far imposed have caused sometimes violent protests on the streets.
