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Greece will not restructure its debt: report

/ Source: Reuters

Greece will avoid restructuring its debt by generating primary budget surpluses and by implementing reforms that will bring growth in the years ahead, its finance minister told Sunday Eleftherotypia newspaper.

The debt-ridden nation is implementing austerity measures and structural reforms prescribed by the European Union and the International Monetary Fund in exchange for a 110 billion euro bailout, which saved it from bankruptcy.

Although Greece wants to stretch out repayment of the aid it is getting, the finance ministry has repeatedly said that it is not in talks to restructure the country's debt.

"Greece can and will avoid (restructuring its debt)," finance minister George Papaconstantinou said in an interview.

Asked how, he said: "By creating and preserving primary surpluses of 5-6 percent (of GDP), by implementing structural reforms that will bring the real growth rate above 2 percent, and also with the extension of the repayment of the 110 billion euro ($149.8 billion) loan."

Papaconstantinou said he hoped Greece would achieve better funding terms in the future and that he still expects to tap bond markets in 2011 with the so-called "diaspora bond."

"Our first effort will be with the 'diaspora bond' which we aim to issue in the next few months," he said adding that it would address Greeks in Europe, Australia and the U.S. and that the yield would be lower than current market rates.

Greece sold this week 650 million euros ($879.6 million) of three month debt at 4.1 percent, the same yield it paid in a previous November auction. Foreigners bought some 80 percent of that issue.

The government does not plan to increase the VAT tax, Papaconstantinou said, but it will intensify its clampdown on tax evasion to meet budget targets.

"We have reached the point that any further increases in VAT rates can not bring more revenues," he said.