Greece denies euro exit report

 

Greek prime minister George Papandreou today denied there was even unofficial discussion over Athens quitting the euro zone and asked that his troubled country be "left alone to finish its task".

Ministers from the euro zone's biggest economies met in Luxembourg to discuss Greece's debt crisis on Friday but Athens and senior EU officials denied a report by Germany's Der Spiegel Online that the Greek government had raised the prospect of leaving the 17-member euro zone.

"These scenarios are borderline criminal," Mr Papandreou told a conference on the Ionian island of Meganisi. "No such scenario has been discussed even in our unofficial contacts...I call upon everyone in Greece and abroad, and especially in the EU, to leave Greece alone to do its job in peace."

Luxembourg prime minister Jean-Claude Juncker, head of the group of euro zone finance ministers, said it was an "informal meeting". He said there was a broad discussion of Greece and other international economic issues but said the idea of exiting the euro was stupid.

"We have not been discussing the exit of Greece from the euro area. This is a stupid idea. It is in no way - it is an avenue we would never take," he told reporters after the meeting attended by ministers from Germany, France, Italy and Spain.

"We don't want to have the euro area exploding without reason. We were excluding the restructuring option, which is discussed heavily in certain quarters of the financial markets," he added.

But he said a meeting of all euro zone finance ministers on May 16th would discuss whether Greece needed a further economic plan. The EU is currently negotiating a bailout with Portugal, the third state it is rescuing after Greece and Ireland.

The meeting was attended by ministers from Germany, France, Italy and Spain, as well as Greek finance minister George Papaconstantinou, European Central Bank President Jean-Claude Trichet and European commissioner for economic and monetary affairs Olli Rehn.

European Central Bank governing council member Erkki Liikanen today shot down reports of Greece exiting the euro and said restructuring its €327 billion debt would offer no permanent solution to its problems. "No euro zone country wants to leave the euro," Mr Liikanen, who also heads the Bank of Finland, said in an interview at Finnish national broadcaster Yle.

Despite a €110 billion international bailout, Greece, a euro zone member since 2001, has not cut its budget deficit as fast as it promised its lenders amid a deep recession. Gains from spending cuts and tax hikes have been partly erased by low revenues due to tax evasion and a deep recession.

Financial markets have been sceptical for months that Athens could manage its huge debt without eventually restructuring. As austerity bites, even some ruling socialist party politicians have been suggesting a "soft" restructuring which might involve lengthening maturities on the country's bonds.

Yesterday, the euro fell nearly 1 per cent against the dollar and the cost of insuring Greek debt against default was quoted at a record high in response to the Der Spiegel report.