Greece can meet its deficit cutting targets as agreed with international lenders without imposing new austerity measures, despite lagging revenues, Prime Minister George Papandreou said on Sunday. Greece's efforts to exit the debt crisis that has rocked the euro zone will convince sceptical markets, the cost of borrowing will decline and default will be avoided, he told a news conference at an annual trade fair in the northern city of Thessaloniki, according to Reuters. "Debt restructuring would be catastrophic for the economy, credibility and our future," he said. "We would be talking about the collapse of our banking system, it would be a tragedy for households. We are not even discussing it." Greece must cut its budget deficit 8.1 percent of GDP this year from 13.6 percent of GDP in 2009 to meet conditions in a 110-billion-euro bailout agreed with the European Union and the IMF. But tough austerity measures -- taxes have been hiked while state sector salaries and pensions have been cut -- are hurting state revenues and economic activity, plunging Greece into a deeper recession. Papandreou said budget revenues were indeed weak but was confident end-year targets would be met without imposing additional belt-tightening. The slippage on revenues is near 1.5 billion euros. "With the pace we are advancing and with the measures we have already taken, we are confident that we will reach the goal we have set for 2010, and this will be quite an accomplishment," he said. Markets, still nervous about Greece, will eventually be convinced by Greece's efforts and borrowing costs, now prohibitive, will start to decline, he added. Papandreou was speaking a day after delivering his main annual economic speech in Thessaloniki, where about 20,000 protesters gather to march against his policies. He said he understood people's problems but stopped short of offering them concrete relief. He also announced that former ECB vice president Lucas Papademos would be his unpaid adviser on economic policy.
