Greek PM calls on world to restrict speculative trading

WASHINGTON, March 8 (Xinhua) -- Greek Prime Minister George Papandreou on Monday called on the international community to restrict speculative trading, saying such act "imperils not only Greece, but the entire global economy."

Visiting Greek Prime Minister George Papandreou attends a press conference with U.S. Secretary of State Hillary Clinton (not pictured) in Washington D.C., capital of the United States, March 8, 2010. (Xinhua/Zhang Jun)

"Despite the deep reforms we are making, traders and speculators have forced interest rates on Greek bonds to record highs," said Papandreou in a speech at the Brookings Institution.

Many believe there have been malicious rumors, endlessly repeated and tactically amplified, that have been used to manipulate normal market terms for Greek bonds, he said.

Partly as a result, Greece currently has to borrow at rates almost twice as high as other EU countries, said the Greek leader. "So when we borrow 5 billion euros for five years, we must pay about 725 million euros more in interest than Germany does," he stated.

"We will have a very hard time implementing our reform program if the gains from our austerity measures are swallowed up by prohibitive interest rates," he said. "Unprincipled speculators are making billions every day by betting on a Greek default."  

Papandreou admitted that Greece faced "a credibility deficit as a result of the fabricated budget figures our predecessors had published."

He vowed his government will take actions to curb deficit.

"To restore confidence in our country and stability to our economy, we pledged to bring the 12.7-percent deficit down to 8 percent this year, and to EU-mandated levels of 3 percent by 2012, " said Papandreou in the speech.

"The EU was understandably skeptical about our promises to rein in the deficit and crack down on corruption," he said. "But we are demonstrating Greece's decisiveness. Public sector salaries have been cut, retirement ages raised and taxes have increased."