Greek PM rules out any restructuring of national debt

Greek PM George Papandreou ruled out any restructuring of the country`s huge national debt.

Thessaloniki: Greek Prime Minister George Papandreou ruled out on Sunday any restructuring of the country`s huge national debt, warning it would be "catastrophic for the economy".

"The logic of restructuring the debt would be
catastrophic for the economy, for our credibility, for our
future," Papandreou told a press conference in Thessaloniki
where yesterday he had sketched out his economic priorities.
If debt payments were suspended, he said Greece "would
head towards a potential and probable collapse of the banking
system and the loss of Greek families` property (which) would
be a tragedy," he added.

Greece averted default on its debt in May when it
agreed to unprecedented austerity cuts in pensions, public
sector pay and a sales tax hike in return for a
110-billion-euro (USD 140 billion) rescue package from the
European Union and International Monetary Fund.

The measures have triggered waves of strikes and
protests, including one in which three people died when the
bank they worked in was firebombed by youths participating in
a demo in May.

Yesterday, 20,000 people marched against the austerity
drive in Thessaloniki, Greece`s second city, hours before
Papandreou defended the measures in a major speech.

Burdened with debts close to 300 billion euros, the
Greek government had little choice but to turn to the EU and
IMF after a credit rating downgrade triggered a collapse of
investor confidence that drove up Greece`s cost of borrowing
on the bond market.

Even with the EU-IMF bailout, some economists continue
to warn that Greece could in the coming years be forced to
restructure its debts, which would likely cause considerable
economic damage in the country but also in the broader
eurozone as well.

Papandreou stressed that his Socialist government had
strived since coming to power 11 months ago "to avoid

"We have done what we decided to do in order not to
get into the logic of bankruptcy," he said.

Asked if new austerity measures were in store, he said
that "as long as the economy does well, no new measures are
needed," ruling out an increase on heating fuel that the press
has recently speculated on.

Tomorrow, IMF, EU and ECB officials are due in Athens
for a check-up on the government`s success in meeting the
conditions for the international bailout so that a third
tranche of loans worth nine billion euros can be made.