Any Greek debt restructuring which caused losses for investors would be a "huge mistake" and would
bar Greece from borrowing on markets for at least a decade, the finance minister said on Tuesday."A restructuring, a haircut on the debt, would be a huge mistake for the country," Finance Minister George Papaconstantinou told state television NET.
"We would be shut out from markets for 10-15 years," Papaconstantinou said, adding that Greek social security funds which hold a large share of state debt would be affected, as would the domestic banking sector.
A 'haircut' is a form of restructuring which entails losses for debt holders.
Another option is a debt repayment extension negotiated with creditors.
Greece has a crushing debt of about 340 billion euros ($504 billion).
The country came close to bankruptcy a year ago when investors began demanding high rates for making new loans.
The European Union and the International Monetary Fund then put together a rescue package to enable Greece to avoid default.
But under the terms of that rescue, worth 110 billion euros over three years, Greece is obliged to begin raising its own funds from 2012 onwards.
A new audit by EU, IMF and European Central Bank experts, needed to unlock a 12-billion-euro slice of the loan which is vital to Greece's continued solvency, begins later this week.
Many analysts have reasoned that debt repayments are unsustainable because the economy is mired in recession and borrowing rates are still high.
A number of Greek officials, including a former prime minister who supervised the country's accession to the euro, have called on the government to consider debt restructuring options.
AFP
"We would be shut out from markets for 10-15 years," Papaconstantinou said, adding that Greek social security funds which hold a large share of state debt would be affected, as would the domestic banking sector.
A 'haircut' is a form of restructuring which entails losses for debt holders.
Another option is a debt repayment extension negotiated with creditors.
Greece has a crushing debt of about 340 billion euros ($504 billion).
The country came close to bankruptcy a year ago when investors began demanding high rates for making new loans.
The European Union and the International Monetary Fund then put together a rescue package to enable Greece to avoid default.
But under the terms of that rescue, worth 110 billion euros over three years, Greece is obliged to begin raising its own funds from 2012 onwards.
A new audit by EU, IMF and European Central Bank experts, needed to unlock a 12-billion-euro slice of the loan which is vital to Greece's continued solvency, begins later this week.
Many analysts have reasoned that debt repayments are unsustainable because the economy is mired in recession and borrowing rates are still high.
A number of Greek officials, including a former prime minister who supervised the country's accession to the euro, have called on the government to consider debt restructuring options.
AFP
