Greece vows commitment to euro, meeting budget targets
By Howard Schneider,
Greece’s commitment to the euro is “firm and irrevocable,” the country’s finance minister said Sunday as euro-zone officials tried to press their case that the currency union will stick together.
Addressing an audience of international bankers and finance officials, Finance Minister Evangelos Venizelos, who is also deputy prime minister, said recent steps such as the furloughing of 30,000 government employees will allow the nation to meet its budget targets for 2011.
But he cautioned that the country is in a “vicious circle” in which budget reductions undercut economic performance, and he appealed for international help to reverse its misfortunes.
That would come in part through a voluntary reduction in the value of the country’s bonds that has been negotiated by the Institute of International Finance (IIF), the group Venizelos was addressing Sunday.
Details of the debt restructuring are being worked out, and a formal offer to banks and bondholders is expected soon.
While that and other programs take more concrete shape, Greece remains at the center of concern about the possibility that euro-zone countries may default on their international bonds.
Officials from the United States, China and many other nations spent the weekend pressuring European leaders to craft a stronger response to the debt crisis afflicting the continent, particularly with regards to Greece. That pressure, including comments from U.S. Treasury Secretary Timothy F. Geithner warning of “cascading default, bank runs and catastrophic risk,” did not always sit well with their European counterparts, some of whom have worried that the international pressure has worsened the atmosphere of crisis.
Under intensifying pressure to prove that a default or euro breakup won’t happen, euro-zone officials used sessions such as this weekend’s IIF annual conference and meetings at the International Monetary Fund to demonstrate resolve.
Irish Finance Minister Michael Noonan told the IIF that his country’s recovery program is going well enough that Ireland may try to sell new bonds to private investors in 2012 — a year earlier than envisioned by the joint IMF-European rescue program for the country.
Still, doubts remain, including skepticism about whether the combination of international loans and private debt restructuring contemplated for Greece will be enough.
Venizelos is set to hold meetings with IMF officials before the return to Greece this week of an international oversight team that is expected to clear the way for $11 billion in international loans due to the country in October.