Debt default cannot always be avoided: Estonian minister

9th September 2011, Comments 0 comments

In a market economy, a default on debt repayments cannot always be avoided, Estonian Economy Minister Juhan Parts said in a newspaper interview on Friday.

"It's still not clear to me, how a default on debt repayments can be avoided. That must be a possible option in a market economy," Parts told the Financial Times Deutschland.

"It would be illogical not to talk about this issue."

The minister's comments come amid growing concerns that heavily-indebted Greece will not be able to implement the reforms it has promised as a pre-condition for further financial aid from its eurozone partners.

Estonia, which was compelled to implement drastic economic reforms of its own in the past, had the lowest level of debt -- 6.6 percent of output -- in the European Union in 2010.

Parts also rejected the idea of an economic government for the 17 countries that share the euro, as put forward by French President Nicolas Sarkozy and German Chancellor Angela Merkel.

"What form would this take? There is already a clear agreement in the form of the European stability and growth pact. But we don't know how to force the Italians to abide by it," Parts said.

© 2011 AFP

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