Greece’s Finance Minister Evangelos Venizelos is offering a positive spin on the move by a major ratings agency to downgrade Greek bond ratings.
On Monday, Moody’s said that it is almost inevitable the country will be considered to be in default following last week’s new EU bailout package.
Asked about the development following a speech in Washington, Mr. Evangelos pointed to the agency’s conclusion that the new package will help Greece stabilize its debt.
“For the first time in the last two years, we have positive signals from the international financial community,” he said at The Peterson Institute for International Economics.
Eurozone countries and the International Monetary Fund last week agreed to give Greece a second bailout worth euro109 billion ($155 billion), on top of the euro110 billion granted in rescue loans a year ago.
If all goes to plan, banks and other private investors will contribute some euro50 billion ($71 billion) to the rescue package until 2014 by swapping Greek bonds that they hold for new ones with lower interest rates or slightly lower face value, or selling the bonds back to Greece at a low price.
But despite a package that was more comprehensive than many in the markets had predicted, Moody’s said it is going to take many years of hard adjustment for Greece to get complete control of its debts.
Venizelos said he had discussed the new plan in meetings Monday with U.S. Treasury Secretary Timothy Geithner and International Monetary Fund Managing Director Christine Lagarde.
In a statement Treasury Department spokeswoman Nathalie Wyeth said that Mr. Geithner urged Greece to press on with economic reforms.
“Secretary Geithner welcomed the progress Greece has already made toward strengthening its public finances and underscored the need for continued and full implementation of the program,” she said.
In his speech, Venizelos called U.S. support, especially through its weight within the IMF essential. The IMF has not yet said how much it will commit to the new bailout package. Mr. Venizelos, said that Greece and European partners welcome IMF involvement.
“The Eurozone is open to the participation and assistance of the IMF which has a vast experience and know-how,” he said.
Mr. Venizelos said that Greece is committed to its austerity measures and stressed that a privatization plan would be key to stabilizing its finances.
“Now the key point is to implement the program,” he said in his speech. “Our goal is to return to positive growth and create primary surpluses by 2012.”
He said he was also seeking support from the U.S. private sector during his visit.