Friday, March 5, 2010

UPDATE 1-Merkel says no need to give Greece financial aid

BERLIN, March 5 (Reuters) - German Chancellor Angela Merkel said on Friday that the stability of euro zone was not currently at risk from the Greek debt crisis, so direct aid to Athens was unnecessary.

Speaking at a joint news conference with Greek Prime Minister George Papandreou after the two held talks, she called on Athens to implement reforms quickly.

"Greece has not asked for financial aid. The euro zone is stable at the moment. And therefore this question (of aid) does not present itself," Merkel said.

"We can't predict all the scenarios what will occur over the next 10 years. But the question does not present itself today and we are working to ensure it will not in the future. I am optimistic that will be the case."

Doubts over Greece's ability to service its debt have led to turbulence on euro zone markets, including a sharp fall in the euro, and provoked fears that investors may lose faith in debt issued by other governments in the bloc which are struggling to control their budget deficits.

However, German public opinion is strongly against bailing out Greece.

Merkel noted that Ireland had already taken harsh measures to curb its budget deficit and Germany was also doing so.

Papandreou confirmed that Athens had sought no direct aid, although Greek officials have appealed for euro zone governments to signal their confidence in his government's ability to reduces its massive deficit.

He pointed to a third austerity package he announced this week. "I heard Mrs. Merkel's positive support for the measures Greece has taken," said Papandreou. "The austerity measures show our credibility and determination."

"They are tangible proof of credibility and they are what the international community was waiting to see," he added. (Reporting by Madeline Chambers, Paul Carrel and Harry Papachristou; writing by David Stamp: editing by Noah Barkin)
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