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UPDATE 1-German FinMin - We can't pay for Greece's mistakes

Published 12/21/2009, 08:17 AM
Updated 12/21/2009, 08:21 AM

* Greece living beyond means for years, German FinMin says

* Says Athens must make savings

* Greek bond spread widens

(Adds quote, background)

BERLIN, Dec 21 (Reuters) - Germany cannot pay for Greece's fiscal mistakes, Finance Minister Wolfgang Schaeuble was quoted on Monday as saying, reiterating his view that Athens must solve its budget problems itself.

Hit by rating downgrades, the euro zone's weakest member has seen its borrowing costs shoot higher on worries over its capacity to service a debt load that will top 300 billion euros next year.

"The situation is uncomfortable," Schaeuble told mass selling German daily Bild in an interview.

"Greece has been living beyond its means for years. The country cannot avoid saving and helping itself. We Germans cannot pay for the Greeks' mistakes," he added.

On Friday, Greek Finance Minister George Papaconstantinou said Athens wants to enact tax reform by next March to boost budget revenues and convince creditors it is serious about restoring fiscal health.

But the premium investors demand to hold 10-year Greek government bonds rather than euro zone benchmark German Bunds rose again on Monday as concerns about the country's fiscal situation persisted. [ID:nLDE5BK0MO]

The president of Germany's Bundesbank central bank, Axel Weber, said earlier this month there was no need for the International Monetary Fund to help Greece out of its fiscal difficulties.

Papaconstantinou has also said there is no reason for Greece to ask the IMF for help and that Athens will instead solve its problems "inside the European Union and according to the bloc's rules". (Writing by Paul Carrel; editing by Patrick Graham)

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