Forex Trading News – Greece remains adamant about no debt restructuring

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EuroFinancial markets continue to expect that the euro zone debt crisis will worsen and despite Greece insisting on Tuesday any restructuring of its debts would be a disaster for the economy, it is likely to happen.

One year ago, Greece was granted an extension of its 110 billion euros ($163 billion) in loans by the EU and the IMF in exchange for deep structural adjustments to its economy. This year the Greek government’s debts are expected to hit around 340 billion euros.

Meanwhile, the Greek finance minister, George Papaconstantinou is still against debt restructuring. While EU and IMF inspectors are in Athens to assess if the government’s austerity plans are sufficient He commented that “A restructuring, haircuts on debt, would be a huge mistake for the country.

He added: “It would have a very big cost and we would not have the benefit, we would stay out of markets for 10-15 years, the wealth of Greek pension funds would suffer writedowns, we would have problems in the banking system and hence the real economy.”

Despite the minister’s view, two German government advisers commented a week ago that a restructuring of the country’s debt pile, which is only increasing as Greece’s output is contracting, was now inevitable, and markets hold the same view.