Greece on target to deficit goal with no more cuts

By Reuters
Posted July 6, 2010 at 1:50 p.m.

Greece will cut its deficit to reach the target this year without taking any further austerity measures, the country’s central banker said  Tuesday.

“I believe we will achieve the deficit target of 8.1 percent of GDP from 13.7 percent (last year),” Bank of Greece governor George Provopoulos told Greek television Mega Channel.
The deficit shrank at an annual rate of 42 percent between January and June, boding well for the full-year target and removing any need for further austerity cuts, Provopoulos said.

“There will be no need to do anything more, to the extent that progress continues at the current rate,” said Provopoulos, also a member of the European Central Bank’s Governing Council.

Provopoulos dismissed any concerns that Greece will need to restructure its debt. “Debt restructuring is not necessary, I’m categorical,” Provopoulos said. “It would be dramatic even to think about it.”

Provopoulos said he expected stress tests to show that Greek banks face no liquidity problems but urged them to join forces to cope with the country’s economic crisis.

“In a more difficult macroeconomic environment, there will be pressure and trends to join forces,” he said. “I have called banks to think strategically about their future and to proceed, in an amical and pre-arranged way, to moves that will create synergies.”

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