By David Barwick

WASHINGTON (MNI) – There is no truth to media reports that a German
plan to restructure Greek debt is in the works, Greek Finance Minister
George Papaconstantinou said Friday.

Speaking to journalists during the Spring Meetings of the IMF and
World Bank, Papaconstantinou said that a restructuring of debt is “not
the position of the German government, not the position of the Greek
government and not the position of the organizations supporting the
[Greek consolidation] program, full stop.”

There are various reasons why the Greek government continues to
oppose a restructuring of its debt, the finance minister said. For one
thing, he noted, “we have already reduced our primary deficit
significantly in 2010 and will continue to do so.”

Moreover, “debt sustainability depends on high growth rates,” he
said. The consolidation program is “giving the economy a positive growth
shock … to increase the country’s potential growth.”

Thus “the necessary conditions of being able to grow at rate that
make [restructuring] unnecessary will be there,” he said.

“There’s a lot of rumours going around at the moment and I think we
need to stick to the facts,” he said in dismissal of persistent reports
in media of growing support for Greek debt restructuring.

“No one should doubt the Greek government’s determination” to stay
the course, he said.

Asked about higher official borrowing costs, Papaconstantinou said
that while it “may be driven by concerns about inflation, on the other
hand it has an effect on borrowing costs.”

However, he added, the more important aspect is the spread,and “if
market confidence returns, this will more than outweigh the higher
borrowing costs.”

Challenged on his government’s ambitious privatization plans,
Papaconstantinou insisted that in the present case, “the assets that are
on the table are the right assets,” the market conditions are right for
finding buyers, and the political will to push through the privatization
is strong.

“So I’m not being an optimist, I’m being a realist” about the
privatization program, he said.

Although Papaconstantinou said that he had not seen his “good
friend,” German Finance Minister Wolfgang Schaeuble, today, he had
spoken to U.S. Treasury Secretary Tim Geithner. He reported that
Geithner was “extremely positive on the efforts” being made by Greece
and felt that “pursuing this effort will bring rewards.”

In other comments, the finance minister affirmed that “the Greek
economy is at the crossroads. 2011 the recession will continue but it
will be more shallow.”

“We are seeing some very encouraging first indicators that we are
nearing a turnaround,” he said, noting high export growth and better
economic sentiment; “from a low base, but it’s improving,” he said.

At the same time, he conceded, unemployment remains high.

“We are moving ahead in difficult times, there is no question about
it,” he said.

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

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