Debt restructuring 'wouldn't help' Greece: ECB official

26th April 2011, Comments 0 comments

A much-debated restructuring of Greece's vast mountain of debt would not help the country and Athens must focus on boosting its economy, a senior European Central Bank official said on Tuesday.

Speaking to German daily Frankfurter Allgemeine Zeitung, Erkki Liikanen said: "A highly-indebted country needs to achieve a budgetary surplus. A restructuring would not change that."

"The second point is the requirement to increase economic growth. Restructuring also would not help this," added Liikanen, who is also the head of the central bank of Finland.

Athens has reacted angrily to persistent rumours that it is about to seek easier repayment terms from its creditors on a soaring 340-billion-euro ($495-billion) debt.

The rate of return on Greek benchmark 10-year government bonds has soared, reflecting deep-seated doubt that Athens can stabilise its public finances.

Turning to ECB monetary policy, Liikanen said the central bank would act against any perceived inflationary risk. At its recent meeting, the ECB raised interest rates for the first time since mid-2008.

He said the bank would stay firm against second-round inflationary effects -- which occur when higher energy prices seep into generalised price increases.

© 2011 AFP

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