Greece vows to continue budget cuts and avoid debt restructuring

GREEK Prime Minister George Papandreou will discuss new measures with his cabinet today to cut the budget deficit, in an effort to convince lenders Greece can deal with a debt crisis without a restructuring.

At stake is a €12bn (£10.4bn) aid tranche under the EU/IMF bailout agreed last year, as well as additional help as the country is not expected to return to bond markets in 2012.

“Debt restructuring is not under discussion,” Papandreou said in a Greek Sunday newspaper interview.

But at the same time he conceded that “it does not appear at present that Greece will be able to cover its borrowing requirements in 2012 normally, from the markets”.

Papandreou must present a fiscal plan this week that is credible enough for the European Union and the International Monetary Fund to continue bankrolling his country.

One year into its EU/IMF €110bn (£96bn) bailout, Greece is struggling with weak revenues and deep recession. The European Central Bank is opposed to any debt restructuring for fear of contagion.

Meanwhile the chairman of the 17-country Eurogroup Jean-Claude Juncker said Greece should set up an agency to privatise its state assets.