European Central Bank Executive Board member Juergen Stark sent currency markets into a tailspin earlier Wednesday after telling Italian newspaper Il Sole 24 that the EU bloc would not bail out Greece if its double-digit budget deficit worsened.
“The markets are deluding themselves when they think at a certain point the other member states will put their hands on their wallets to save Greece,” Stark told the Italian newspaper.
Reacting to Stark’s comments, Greek Finance Minister George Papaconstantinou rejected any prospect of his country needing a bailout and called Stark’s comments, ‘not very helpful’.
“We did not ask for nor expect a bailout,” Papaconstantinou said in an interview. “We are doing what needs to be done to bring the deficit down and control the public debt.”
But, despite reassurances, plans by the Greek government to reduce its debt to under 3% by 2012 from 12.7% in 2009 have been met with increasing skepticism by international markets. In Wednesday’s report, Stark also said Greece had not controlled its public accounts or worked to help improve the country’s competitiveness.
All three major credit rating agencies have downgraded Geece out of concern about the country’s fiscal weakness.
