Greece won't need aid, cenbank chief tells paper

Monday 8th March 2010

Greece will not need foreign help to deal with its debt problems, central bank governor George Provopoulos said in a German newspaper interview.

Provopoulos told the Financial Times Deutschland (FTD) that solid demand for a 10-year, $6.8bn bond Greece sold on March 4 showed Athens could raise the funds it needs on financial markets.

The order book for the bond issue closed in excess of 16 billion euros with over 400 investors involved.

Greece had to pay a "rather high" price to sell the bonds, Provopoulos said, but he was confident the issuance costs would ease, telling the paper: "From now the pressure will abate."

He expected Greece to get out of its debt crisis on its own.

"A scenario in which help is necessary will not become reality," Provopoulos said, adding that he expected "no further negative surprises" with regard to Greece's credit rating.

"I am not concerned that Moody's will downgrade Greece further," he said.

Moody's has Greece rated A2 with a negative outlook and has said Athens must implement its fiscal austerity plans perfectly or face the prospect of a rating cut.

Greece unveiled a $6.52bn austerity package to hack back its double-digit deficit, and blames market speculators, who are betting on a possible Greek default, for pushing up the cost of its debt servicing.

Financial markets are now closely watching whether the Greek public will accept the government's belt-tightening or take to the streets.

Should Greece need foreign help, Provopoulos opposed the idea of going to the International Monetary Fund.

"Greece is part of the euro family and if help were necessary, that should be the Eurozone's job," he said.

French President Nicolas Sarkozy promised Greece that Eurozone countries would help it overcome its financial problems and vowed a crackdown on financial speculators Athens blames for its woes.

He was speaking after talks with Greek Prime Minister George Papandreou, who is seeking pledges of support from European capitals that will reassure markets.

"The main actors on the European stage are decided to do whatever is needed to make sure Greece is not isolated," Sarkozy said, ruling out any immediate financial backing, but stressing that his economy minister was drawing up possible aid plans.

Papandreou met German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker recently and was due to fly to Washington to see US leaders.

He had been hoping for pledges of a specific aid plan, believing this would make it easier for him to sell the austerity measures that he is imposing on his country.

Although no concrete measures have surfaced, Papandreou told reporters he saw the outlines of a plan.

"After my meetings more specific ways are beginning to emerge about how to deal with any possible borrowing problems," he said, declining to give further details.

Germany has appeared particularly reluctant about riding to Greece's rescue, but Sarkozy said no one should doubt Merkel's commitment to resolve the crisis.

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