LONDON – Greek Prime Minister George Papandreou told other European leaders Friday that Greece intended to solve its debt crisis on its own, as the government replaced the head of its debt management agency ahead of key moves to refinance its massive deficit.
The news that Petros Christodoulou, former head of asset management at the National Bank of Greece, will take over from Spyros Papanicolaou comes as financial markets continue to fret about the Greek government’s ability to pay off its debt. Those worries have undermined confidence in the 16-country euro currency.
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The Finance Ministry did not give a reason for the appointment in its announcement late Thursday.
Greece has taken a hammering in markets in recent months, after the new government sharply revised the budget deficit shortly after the elections to 12.7 percent of gross domestic product from a 3.7 percent forecast months earlier – sending Europe into a new phase of the financial crisis over mounting debts by Greece and several other eurozone countries.
Spreads of Greek government bonds over the equivalent German benchmark bonds – a key indicator of the market’s perception of a risk of default – have spiraled in recent weeks, and stood at 326 basis points on Friday afternoon. Papandreou reiterated in London that Greece’s troubles were ”our responsibility” and that Greece was not seeking a bailout. But he said Athens’ woes affected all and that the country needed the support of its EU partners.
”Higher interest rates for us means higher interest rates for Europe. What we are simply saying is we’d like to borrow on the same terms as other countries in the European Union and the eurozone,” Papandreou said at a conference of socialist leaders.
There is mounting speculation in the markets that Greece will begin looking to tap investors before the end of February to take advantage of improved market conditions – last month the spread over German bonds stood near 400 basis points.
Papandreou repeated his view that the country was not looking for a bailout from its partners in the 16-country eurozone but ”simply saying we have a program and we need support for this program.” His government has pledged to cut its budget deficit by 4 percentage points this year.
Papandreou also met with British Prime Minister Gordon Brown and Spain’s premier Jose Luis Rodriguez Zapatero, as well as Foreign Secretary David Miliband.
In Athens, Greek drivers lined up for gas at the few stations still open Friday as a customs strike against government austerity measures left many pumps running dry. The fuel shortage was the first serious consequence of growing labor protests against the emergency cuts, aimed at easing the debt crisis and shoring up market confidence.
Customs workers have extended their strike against salary freezes and bonus cuts through next Wednesday, when unions across Greece will hold a general strike that is set to bring the country to a standstill.
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