BERLIN (MNI) – European Central Bank Executive Board member Lorenzo
Bini Smaghi said Friday he is “confident” that the budget consolidation
plan for Greece to be finalized this weekend will work and lead to a
change of market sentiment.
Asked if there needs to be a Plan B for Greece in case the program
to be worked out by the ECB, the EU Commission and the IMF fails to
improve the Greek situation, Bini Smaghi replied: “We’re working for
Plan A and if everybody signs it, Plan A will work.”
Speaking at a press conference at an event organised by the Aspen
Institute here, Bini Smaghi lashed out at rating agencies for having
downgraded Greece only a few days before the consolidation program for
the country is to be published.
“It is very surprising that rating agencies already communicate
their intentions before knowing the data, and this is at the limit of
ethical good practice,” the central banker said. “It will lead to a loss
of credibility of these rating agencies.”
He said Greece was on the verge of adopting a series of reforms
which “are very important and which will change the way that the country
is working.”
Bini Smaghi noted that the large majority of IMF programs for
countries in financial difficulties have always worked. They’ve failed
only in a few minor cases in poor countries with huge political
problems, he pointed out. These poor countries, however, cannot be
compared to European countries, he argued.
“I’m curious to see what will happen when the agreement will be
reached, whether this information will lead to a change in market
sentiment,” the ECB Executive Board member said. “I’m confident,” he
added.
The behaviour of rating agencies “certainly reinforced the
conviction of those who think that as far as the sovereign risk is
concerned, having … two agencies and a half certainly does not give a
sufficiently competitive situation,” he asserted.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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