Greek Finance Minister George Papaconstantinou adjusts his microphone during a press conference. Photo: AFP Greek Finance Minister George Papaconstantinou adjusts his microphone during a press conference. Photo: AFP
Tilburg - European central banker Nout Wellink said on Monday he opposed a debt restructuring for struggling Greece but was open to the idea of a possible extension of maturities.
In the first public comments from a member of the ECB's Governing Council pointing to a possible rescheduling of repayments for the debt-mired euro zone state, Wellinck said: “Restructuring is essentially saying: 'Send me the bill. We feel sorry for you.' You shouldn't do that. Paying the bill hurts.
“It may sometimes take longer than expected. It can sometimes lead to a restructuring - but not in the way some advocate it to be - that ... leads to a longer maturity of debt.”
Wellink, taking questions from students at Tilburg University in the south of the Netherlands, said that if Greece did not repay borrowed funds in full, it could stay frozen out of the financial markets.
“You also have to say: 'If you don't pay the bills you never have to knock on our doors again. That your access to financial markets is closed...
“That you will come in a downward spiral, whose negative effects are even bigger than the pain you suffer and have to suffer on the short term.' You have to explain that it (restructuring) is not an option,” Wellink said.
He added that Greece must find a way to reduce its budget deficit “in such a way to balance spending and income again.”
Wellink, who also heads the Dutch central bank, said he expected Spain to be able to resolve its budget problems.
“Spain has a tradition of solid government finances. It has now gotten out of hand and they are dealing with it. Spain had a low debt (to gross domestic product) ratio. Spain should be able to solve its problem,” Wellink said. - Reuters