Greek debt restructuring fears unfounded, says EU’s Rehn

Greece is on track in its efforts to cut spending and return to financial stability, and concerns that it could be forced to restructure its debt are unfounded, the EU's economic and monetary affairs commissioner wrote in the Wall Street Journal.
"Greece has taken drastic, sometimes painful, steps to turn an unsustainable situation around," Olli Rehn wrote in an opinion piece published in the WSJ on Tuesday.
"I am aware that the Greek reform drive has not killed concerns that Athens might yet be forced to restructure its debt," he wrote.
But he added: "For several intertwined reasons, I find these concerns unfounded."
Athens' adjustment programme, which will see fiscal consolidation totalling about 8 percent of gross domestic product (GDP) this year, was ambitious but also realistic, and there were signs it was doing better than expected, Rehn said.
At the same time, Rehn said Greece's hard work could pay off and lead to a higher level of growth.
"In fact, the impressive progress with structural reforms is likely to lead to a higher than assumed GDP growth," he said, without providing figures or projections.
He gave three reasons why debt restructuring was unlikely.
Firstly, he said pension reform was being implemented ahead of schedule, greatly reducing spending pressures in the future.
Second, broader structural changes to the economy have strengthened medium-term growth prospects, reducing the pressure on debt financing.
And third, those advocating debt restructuring tended to understate the costs, both economically and politically.
"It would mean severe knock-on effects, through a protracted disruption of the broader economy and financial system in Greece, and have adverse consequences for the whole euro area and the global economy," he said.
"Its political costs would be extremely damaging not only for Greece but for the euro area and the European Union as a whole. While improving credibility does not happen overnight, we are seeing signs of a gradual stabilization in market sentiment toward Greece."