ECB's Asmussen tells Greece to focus on reforms

Mon Jul 2, 2012 9:33am EDT
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By George Georgiopoulos and Deepa Babington

ATHENS (Reuters) - Greece must not lose time trying to renegotiate its foreign bailout but focus on reforms instead, European Central Bank policymaker Joerg Asmussen said on Monday, in a blow to Greek hopes of winning quick concessions from its lenders.

Asmussen's comments signaled the tough message the so-called "troika" of EU, ECB and IMF lenders are likely to bring this week to Athens, where a new conservative-led government has promised voters to overhaul the terms of the unpopular bailout.

"The first priority for the new Greek government has to be getting the program back on track," Asmussen, an ECB Executive Board member, said in a speech on Monday, adding that policy implementation had virtually stalled over the past three months.

"The new government should not lose precious time looking to avoid or loosen the program."

Days after taking office, Prime Minister Antonis Samaras outlined a wishlist of changes to the 130-billion-euro rescue plan to lessen the toll on an economy buckling under its fifth year of recession. But Asmussen, formerly a close advisor of German Chancellor Angela Merkel, warned against trying to delay adjustments or relaxing Greece's target of bringing debt down to a more sustainable level of 120 percent of GDP by 2020.

"Delaying adjustment is risky... And it is also not free: it requires additional funding from the creditor countries, because the country still runs a primary deficit," Asmussen said.

Asmussen, who has become an international negotiator for the ECB since joining the bank at the start of the year, told a Greek newspaper at the weekend that Greece's lenders were willing to rework some of the program's conditions, but not drastically.

His comments poured cold water on Greek hopes, sparked by the EU summit, that the country might wrest concessions similar to those granted Spain and Italy, particularly the direct recapitalization of its banks from the EU's rescue funds.   Continued...

European Central Bank (ECB) Executive Board member Joerg Asmussen smiles during an interview with Reuters in Berlin June 19, 2012. REUTERS/Pawel Kopczynski