LONDON (MNI) – Greek Finance Minister Giorgios Papaconstantinou
sought to distance his country from troubled Ireland tonight, saying
that Greece “is not Ireland” and stressed that Greece’s banks had not
got ahead of themselves as in Ireland.

“Greece is not Ireland, we don’t have a banking system ahead of
itself, we have a credibility problem with sovereign that became a
funding problem in international markets for our banking system”.

In a speech at the London School of Economics, the minister warned
that Eurostat’s estimate for the budget deficit of Greece in 2009 would
be “substantially” higher compared with that already announced.

Papaconstantinou said that Greece would end this year with the
budget deficit 5.5% percentage points lower than it started but that the
country had only taken the “first steps on a long and difficult road”.

“Where are we at? Well, we’re going to close the year having in
fact closed the deficit by at least five and a half percentage points,
maybe more”.

The economy was not out of the woods, he added.

“Are we out of the woods?… no this is the first step on a long
and very difficult road.”

But Greece is winning support from its own voters for the measures
it has had to take and said that he expected that the current government
would win an election with a narrow majority.

“Despite the hardship, despite the fact we’ve done some really
difficult things this past year, we have not been thrown out. We had
elections last night, we came first, with a much slimmer majority, these
were local elections not national, if there were national elections
tomorrow we would win, with a more narrow majority.”

He admitted that Greeks did not find the current austerity policies
easy to live up to:

“We’re not a collective society,” he said.

“It doesn’t come naturally,” he continued.

He said that growth and demand would need to come from exports and
investment in order to improve debt reduction dynamics and said that he
expected domestic consumption to be below its recent levels for some
years.

The shipping sector would be key to recovery and it was picking up,
he noted.

He continued – “The finance sector is showing first signs of
life”.

The minister complained that at the moment all EU countries are
“falling over themselves” to please the markets and warned that this
“not necessarily a healthy situation”.

–London newsroom: 00 44 20 7862 7492; email: wwilkes@marketnews.com

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