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ATHENS, Dec 17 (Reuters) - Greece faces relatively low debt servicing needs in the coming years and further debt relief is not a matter of urgency, Greek financial daily Naftemporiki quoted European Central Bank Governing Council member Jens Weidmann as saying on Thursday.
“In 2014 interest payments as a percentage of GDP were lower in Greece than in Spain, Portugal and Italy,” Weidmann, head of Germany’s central bank, told the paper.
“Taking into account the low refinancing needs for the next years, further debt relief does not seem to be an issue of particularly urgent interest.”
Athens has been struggling to legislate reforms agreed with its euro zone partners in exchange for an 86 billion euro bailout, the third financial aid package to keep it afloat since its debt crisis exploded in 2010.
The government, however, wants some form of debt relief to allow for future growth.
Weidmann said the most important task at hand was the full implementation of the agreed economic adjustment programme of reforms.
“This will not simply increase the ability to grow but also dissolve prevailing uncertainty which acts as a brake for investments,” he told the paper.
The central banker also said it is too early for a joint deposit guarantee system in the euro zone as this would mutualise risks linked to national policies.
“European banks have high concentrations of national debt on their balance sheets. Mutualising bank risks would be equal to mutualising state risks,” he was quoted as saying.
He told the paper it was up to the Greek government to decide when to lift capital controls it imposed in late June to stem a flight of deposits.
“What must be clear is that the Eurosystem (of euro zone central banks) must not again face a situation of needing to finance the flight of capital through the provision of emergency funding to banks because investors’ trust in a country’s economic policy falls abruptly,” Weidmann said.
Greek banks have relied on emergency liquidity assistance drawn from the Greek central bank since February after being cut off from the ECB’s funding window due to stalled bailout talks between the Greek government and its official lenders.
Emergency funding came down to 77.5 billion euros in November from 82.8 billion in the previous month as liquidity conditions improved. (Reporting by George Georgiopoulos Editing by Jeremy Gaunt)