HELSINKI (MNI) – ECB President Jean-Claude Trichet on Thursday
endorsed the recently agreed E78 billion bailout package for Portugal,
while once again strongly rejecting the notion that Greece might have to
restructure its sovereign debt.

He also expressed the ECB’s solidarity with Ireland in the
strongest possible terms.

“Clearly, we consider that the [Portuguese] program contains the
necessary elements to bring about a stabilization of the Portuguese
economy. On this basis we are confident,” Trichet told reporters at his
monthly press conference following the ECB Governing Council’s decision
to leave interest rates unchanged.

However, acutely aware of the politically precarious position of
Portugal’s caretaker government ahead of snap elections called for June
5, Trichet added, “Of course, it calls for the present government for
the time that it has, and future governments, to do the job — which is
absolutely essential.”

The Portuguese plan, details of which were unveiled earlier
Thursday, would include E26 billion in loans from the International
Monetary Fund and E52 billion from the EU, in exchange for a sweeping
package of deficit-cutting measures, including public sector spending
cuts and tax hikes for consumers.

Trichet largely evaded a question about whether the likely
participation in a new Finnish government of the strongly anti-bailout
nationalist party True Finns could obstruct European approval of the
proposed plan for Portugal.

The True Finns campaigned against Finland’s contribution to the
recently created European Financial Stability Facility, and it remains
to be seen how far they will take their position. A final accord on the
financing of the EFSF has been delayed until June because of the
political situation in Finland.

Trichet noted only that the EU portion of loan money for Portugal
could be split roughly 50-50 between the EFSF and the pre-existing
European Financial Stabilization Mechanism. He had nothing to say on
whether the ECB might drop its rating requirement on Portuguese
government bonds that are used as collateral in refinancing auctions, as
it has done for Greece and Ireland.

Trichet exhorted Greece to implement fully the austerity plan and
sought to quell recent rumors and reports that Greek debt might be
restructured.

“We consider it is not in the cards,” he said. “We apply a plan and
the plan is to get the country concerned into a position where it will
have as quickly as possible a primary surplus, which is absolutely key.”
His comment was a much stronger rebuttal to the debt restructuring talk
than he had offered in previous appearances.

But he made clear it was not applicable to Greece alone.

“I have been very clear that our message on fiscal policies was a
message that was going to all countries — Greece, of course, among
others,” he said. “The key for recovery is to be credible in achieving
fiscal sustainability — for all countries and most particularly those
countries that have the most work to do.”

Trichet made clear that the ECB’s monetary policy plans would not
be overly influenced by the economic and financial problems of the
periphery. “We are responsibility for price stability in the euro area
as a whole. It is of course on that basis that the euro is observed,” he
said. “We will continue to deliver price stability in line with our
definition.”

He also noted that some Eurozone countries that had suffered from
sluggish economies several years ago are today the fast-growing ones, a
clear reference to Germany. The euro area “is a vast economy, and you
expect some differences of behavior. What matters is the average,” he
said.

Trichet noted that in Ireland there is not only an economic and
fiscal adjustment plan, but a recovery plan for the badly damaged
banking sector which is widely considered to be a credible one.

“We share the view that it is credible,” the ECB chief said. “The
level of commitment of the Eurosystem to Ireland is without precedent.
So the facts speak for themselves. We are siding with Ireland in these
difficult times.”

Trichet declined to be drawn into a discussion about whether the
ECB was in the process of phasing out its bond-buying program, which has
been idle for five consecutive weeks, despite fresh turmoil in sovereign
debt markets that might have justified such intervention.

“You see every week in the [Securities Market Programme]. It is
totally transparent. I have nothing to add,” he said.

Trichet said that the Governing Council did not discuss its
non-standard liquidity measures at today’s meeting.

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