European Central Bank president Jean-Claude Trichet has voiced confidence that Greece will make the necessary decisions to tackle its massive debt.
Trichet's comments in London came as Greek Prime Minister George Papandreou ruled out going cap in hand to the International Monetary Fund as a way out of his country's €300 billion debt problem.
The beleaguered PM said it was 'out of the question to resort to the IMF' after insisting, on the margins of a European summit in Brussels, that Greece was 'not about to default on its debts'.
Papandreou said his government hoped to reduce Greece's public deficit from a forecast 12.7% of gross domestic product this year by four percentage points in 2010.
Greece's sovereign debt was downgraded this week by the international ratings agency Fitch, prompting fears of dangerous divergence in the 16 countries which use the euro.
Analysts had interpreted euro zone and EU political reaction as a precursor to the sort of bail-out assistance offered last year to Hungary, Latvia and Romania.
'We recognise that the problems are serious, that the challenge is huge,' added Papandreou, who is expected to make a statement on Monday outlining new plans to reassure international creditors. Officials are working on a crisis plan due to come into force within seven weeks to save his economy from the threat of a Latin American-style disaster.
The 10-year yield on Greek bonds has risen to about 5.471%, or 2.307 percentage points higher than on the German Bund, meaning that Greece has to pay nearly twice as much as Germany to attract lenders.
