ECB tough message to Greece: focus on reforms

Greece must not lose time trying to renegotiate its foreign bailout but focus on reforms instead, European Central Bank policymaker Joerg Asmussen said today, in a blow to Greek hopes of winning quick concessions from its lenders.

Asmussen's comments signalled the tough message the so-called "troika" of EU, ECB and IMF lenders are likely to bring this week to Athens, where a new conservative-led government has promised voters to overhaul the terms of the unpopular bailout.

"The first priority for the new Greek government has to be getting the programme back on track," Asmussen, an ECB Executive Board member, said in a speech today, adding that policy implementation had virtually stalled over the past three months.

"The new government should not lose precious time looking to avoid or loosen the programme."

Days after taking office, Prime Minister Antonis Samaras outlined a wishlist of changes to the 130-billion-euro rescue plan to lessen the toll on an economy buckling under its fifth year of recession. But Asmussen, formerly a close advisor of German Chancellor Angela Merkel, warned against trying to delay adjustments or relaxing Greece's target of bringing debt down to a more sustainable level of 120 percent of GDP by 2020.

"Delaying adjustment is risky... And it is also not free: it requires additional funding from the creditor countries, because the country still runs a primary deficit," Asmussen said.

Asmussen, who has become an international negotiator for the ECB since joining the bank at the start of the year, told a Greek newspaper at the weekend that Greece's lenders were willing to rework some of the programme's conditions, but not drastically.

His comments poured cold water on Greek hopes, sparked by the EU summit, that the country might wrest concessions similar to those granted Spain and Italy, particularly the direct recapitalisation of its banks from the EU's rescue funds.

Asmussen held talks with both the outgoing and incoming Greek finance ministers after his speech in Athens, saying afterwards only that they had a "good first meeting".

His speech comes ahead of a "Troika" visit to Athens this week, where the demands for a renegotiation of the bailout are expected to come into focus.

Asmussen said it was key for all countries receiving financial support - Ireland, Portugal, Spain, Cyprus - to implement their programmes rigorously to win back investors' trust.

"There is no silver bullet," Asmussen said. "Those who advocate 'once and for all solutions' - be that a banking licence for the ESM, a European transfer system, or the like - are contenting themselves with a superficial analysis," he said.