DAVOS (MNI) – Eurozone and IMF aid packages do not foresee Greece
or Ireland defaulting on their debt, European Central Bank President
Jean-Claude Trichet said Wednesday, but he failed to categorically rule
out the possibility.

A restructuring “is not in the program. It is not what the IMF
program is foreseeing. It is not what the Commission program is
foreseeing. It is not what has been decided,” Trichet said in an
interview with Reuters TV.

Instead, “it is up to the governments in question” to prove that
they are implementing their respective programs “in the best possible
way,” he added.

Trichet observed that this is “until now what Greece in particular
has been doing,” but he did not categorically reject speculation of
restructuring.

Earlier in the crisis, Trichet had used much stronger language,
saying that “a default is not an issue for Greece,” or assured that the
Eurozone “won’t allow” it.

Markets generally believe that it is only a matter of time before
Greece will need to restructure its debt, which include lengthening of
maturities and possibly haircuts on the value.

In a separate interview with CNBC moments later, Trichet deflected
a question on whether the ECB was worried about absorbing losses on its
balance sheet because of its purchases of troubled peripheral Eurozone
bonds, which now total about E76.5 billion.

Trichet said that losing money on the bonds was “not part of our
working assumption.” Instead, he said, the assumption is that countries
with public financing problems will adopt the proper policies to address
them, stay the course and solve their difficulties.

He evaded a question on when the ECB envisioned ending its bond
purchasing program. It’s up to the governments of individual EMU
governments to implement the policies needed to right their ships. Once
that happens, he said, “we’ll see” about the bond buying.

He added that the ECB’s non-standard measures, “which are by their
nature transitory, will be transitory.”

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

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