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Home News Russia sees Greek debt ‘restructuring’: minister

Russia sees Greek debt ‘restructuring’: minister

Published on 19/06/2010

Russia's finance minister Saturday said he expected Greece to require a restructuring of its debt by creditors, days after a junk status downgrade for the country sparked anger in Brussels.

Alexei Kudrin said such a move would be acceptable for the market and insisted it would be wrong to describe the restructuring as a full-scale default by the embattled government in Athens.

“I would allow for a restructuring of Greece’s debt, which will be unpleasant,” Kudrin told a session of the annual Saint Petersburg economic forum.

“You could call it a mini-default but I would not say it is a default in the full sense of the word. It will be something more complicated,” he said.

“It will not be a deep restructuring, it will be acceptable for the market,” he said, adding that expectations for the restructuring were already priced into the market.

His comments came two days after an EU-IMF team carrying out a health check on Greece’s finances said it had found that its reform programme “is on track and that policies are being implemented as agreed.”

But ratings agency Moody’s earlier this week slashed its assessment of Greek creditworthiness by four notches, from A3 to Ba1, a move described by the European Union’s top economic commissioner Olli Rehn as “surprising and highly unfortunate”.

French Finance Minister Christine Lagarde did not echo Kudrin’s comments, saying that the 110-billion-euro (136-billion-dollar) EU-IMF bailout package for Greece was not dependent on any kind of “haircut” on its debts.

The Greek government “is beginning to reform and change deeply the Greek economy,” she said, speaking at the same meeting. “So to me, at least, that is what matters.”

Greece’s budgetary woes sparked a major financial crisis for the eurozone, prompting a plunge in the value of the euro and even questions over whether the future of the single European currency is secure.

The Russian economy went into near meltdown in 1998 when it defaulted on sovereign debt in the wake of the Asian financial crisis, but reserve funds built up since then allowed it to recover from the current financial crisis.