INTERVIEW - Greek debt restructuring inevitable-Slovak PM

Tue May 10, 2011 6:54pm IST
By Darcy Lambton

LONDON (Reuters) - Restructuring of Greece's debt will be inevitable at some point to overcome the country's debt crisis, Slovak Prime Minister Iveta Radicova said on Tuesday.

Slovakia, a euro zone member since 2009, has long been critical of aid to Greece and refused to take part in the country's bailout last year.

"The crisis in Greece is so deep that without such steps any kind of only financial instruments is not helpful," Radicova told Reuters Insider television in an interview.

Radicova, leader of a centre-right government since July last year, said the financial sector must take some part in any restructuring.

"First of all, the involvement of the private sector, it means mainly the banking sector, financial institutions," she said, when asked what any restructuring should look like.

She said a number of options were possible, including an extension of debt maturities.

Standard and Poor's cut Greece's credit rating further into junk territory on Monday on growing doubts that the single currency area's most fragile economy can handle its debt without imposing losses on private bondholders.

European officials have not ruled out a new rescue package for Greece or easing of the conditions of its existing 110 billion euro aid package which assumed that Greece could return to the markets to raise funding next year.

Radicova said the idea of any country leaving the euro would by dangerous and risk step.

Slovakia is the second poorest among the 17 euro zone countries, and aid to richer members who have failed to rein in their budget deficits is highly unpopular in the central European country.

Slovakia's tough stance has in turn upset some euro zone leaders.

(Writing by Martin Santa in Bratislava, editing by Mike Peacock, sourced Reuters)