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Greek finance minister seeks to reassure markets

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(BRUSSELS) - Greek finance minister Georgios Papaconstantinou sought Wednesday to reassure bond markets that have been edgy after months of uncertainty over the Mediterranean country's spiralling debts.

As European Union finance ministers met to rubberstamp deals for Greece and 13 other member states to address budget deficits that have eclipsed agreed bloc targets, Papaconstantinou said statements from eurozone chief Jean-Claude Juncker the night before had drawn a line under the deepest market concerns, amid fears Athens could somehow become a European Dubai.

"What we have here is a failure of policies," Papaconstantinou said of the old Greek government he and his new team replaced at the start of October.

"Today's decision is important in the sense that it draws a line between the past and the future.

"It is a very clear line of what went wrong and the policies that will be pursued from now on."

Finance ministers from the 16 countries that use the euro decreed on Tuesday that Greece's budgetary deficit and debt was "worrisome," calling for a raft of corrective measures.

But Luxembourg premier Juncker also stressed that "Greece is not in a state of bankruptcy," and Papaconstantinou said his fellow ministers had "recognised that important steps are being taken in the right direction, (although) obviously that much more needs to be done."

Papaonstantinou added: "We have taken office starting from a very difficult point, not only economically, fiscally, but also in terms of lost credibility of the country towards its foreign partners, and towards the citizens.

"In that sense it is a struggle, but I think that given the short space of time that we have had, we've made significant progress."

A new Greek budget for 2010 sets the year's public deficit at 9.1 percent of output, with tweaks due next month that will then be considered by EU partners.

EU officials have said the steps Greece needs to take include tax and expenditure reforms, including that of its pension system, spending reductions within other public sector institutions, and urgent reform of its statistical reporting service.

Accumulated annual deficits are this year expected to go above 300 billion euros (453 billion dollars), accounting for more than 110 percent of gross domestic product.

Under EU rules, the debt is supposed to be reduced at least to a ceiling of 60 percent of output.

The Greek deficit is currently estimated at 30.5 billion euros.

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