German minister says remarks on Greek debt misread

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German Finance Minister Wolfgang Schaeuble on Friday backed off remarks that sparked rumors of a Greek debt restructuring and sent bond rates soaring.

What he said in an interview published Thursday by the daily Die Welt was "wrongly interpreted" by English-language media, Schaeuble said in Washington.

"What the Anglo-Saxon media made out of it was misleading."

Schaeuble told Die Welt that if the International Monetary Fund, the European Central Bank and the European Commission determined in a report to be published in June that Greece was unable to cope with its massive debt, "further steps" would have to be taken.

"If this report should conclude that there is doubt about the debt sustainability, something would have to be done. Further measures would have to be taken."

Markets took that as a signal of a likely automatic move to force a restructuring after the report, and Greek sovereign bonds fell sharply, further punishing the financially embattled country.

Schaeuble did not further elaborate on what he said in the interview.

But Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of eurozone finance ministers, strongly denied talk of a Greek debt restructuring on Friday.

"All these rumors and speculations concerning a restructuring of the Greek debt are totally unfounded," Juncker told reporters in Washington.

"This is not even an option," he added.

"Markets are wrong when they are considering that the programs underway and the programs under negotiation are insufficiently solid," he said ahead of a Group of 20 meeting on global imbalances.

The first eurozone state to need a bailout last May, Greece agreed a 110-billion-euro ($158.9 billon) program with the EU and the IMF after it emerged that Athens's reporting of its deficit and debt levels to Brussels masked huge holes in its finances.

© 2011 AFP

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