BRUSSELS (MNI) – Eurozone countries are putting their reputations
on the line if they delay cutting their budget deficits and public
debts, European Central Bank President Jean-Claude Trichet said on
Thursday.
“The longer the fiscal correction is postponed, the greater the
adjustment needs become and the higher the risk of reputational and
confidence losses,” Trichet said at a press conference after the ECB May
meeting in Lisbon.
“Instead, the swift implementation of front loaded and
comprehensive consolidation plans, focusing on the expenditure side and
combined with structural reforms, will strengthen public confidence in
the capacity of governments to regain sustainability of public finances,
reduce risk premia in interest rates and thus support sustainable growth
over the medium term,” he said.
Concerns about high-debt and deficit countries have pressured the
euro in recent days, sending the single currency to a 14-month low
against the dollar.
After Greece signed onto an aid package from the Eurozone and the
International Monetary Fund worth E110 billion over three years last
weekend, markets speculated that other high debt countries such as
Portugal and Spain could need similar assistance.
Trichet said the “fiscal consolidation will need to exceed
substantially the annual structural adjustment of 0.5% of GDP set as a
minimum requirement by the Stability and Growth Pact.”
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
[TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]
