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UPDATE 1-Greek PM says no rescue plan for euro zone members

Published 03/20/2009, 09:58 AM
Updated 03/20/2009, 10:00 AM

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ATHENS, March 20 (Reuters) - Greece's prime minister denied the existence of a plan to rescue weaker euro zone countries after a senior German lawmaker told Reuters earlier on Friday members of the bloc had agreed on such a plan.

"There is no such prospect, nor a decision (on a rescue plan)," Prime Minister Costas Karamanlis said at a press briefing in Brussels on Friday.

Karamanlis' comments echo denials by Irish Prime Minister Brian Cowen and Italian Prime Minister Silvio Berlusconi.

Germany's Otto Bernhardt said Greece and Ireland would be the top candidates for euro zone aid aimed at preventing any members of the single currency from going bankrupt. A member of Chancellor Angela Merkel's Christian Democrats, Bernhardt chairs the party's financial policy group in parliament.

The Greek Finance Ministry reacted to news of the scheme by saying the country did not need any help to stave off a possible default.

Greece's public debt is projected to rise to 96.3 percent of GDP this year -- the second highest debt-to-GDP ratio in the euro zone after Italy's.

"One of our weaknesses, the biggest, is public debt, which has come down in the last years as a percentage of GDP," Karamanlis said in a televised news conference.

"Shock therapy is not among my intentions. Our policy is a gradual adjustment. Our goal is to see Greece come out of the world financial storm as unscathed as possible."

(Reporting by George Georgiopoulos and Dina Kyriakidou, writing by Valentina Za; Editing by Victoria Main)

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