Greek Prime Minister George Papandreou, background, and European Council President Herman Van Rompuy arrive for statements after their meeting at the premier’s office in Athens, yesterday. (Photo: AP)

ATHENS, Greece

The European Union president yesterday ruled out any restructuring of Greece’s crippling debt, but pressed Athens to see through unpopular reforms intended to balance its finances after years of overspending.

Herman Van Rompuy said changing the repayment terms for the estimated euro340 billion (US$492 billion) burden “would create more problems than solutions.” Many analysts expect some kind of eventual restructuring, although the Greek government insists that is not on the cards — and Van Rompuy agreed.

“Not only is (restructuring) not on the table, it is out of the question,” he said.

But as budget figures showed the government is still struggling with its tough savings targets, Van Rompuy warned that Greece has no option but to stick with its long-overdue economic reform program.

In a Twitter message, he expressed confidence that Greece will pull through.

“It may take time, like Ulysses going home, but (the Greeks) will be stronger,” he tweeted.

The arduous homecoming of the mythical ancient Greek hero Ulysses, or Odysseus, lasted 10 years and included shipwrecks, fights with monsters and the loss of his entire crew.

Greece is on a similarly arduous journey after it was saved from bankruptcy last year by a euro110 billion (US$159 billion) package of rescue loans from its European partners and the International Monetary Fund. In return for the funds, which should see it through mid-2013, the Socialist government has had to take deeply unpopular austerity measures, slashing pensions and civil service salaries while increasing taxes and retirement ages.

“The key is to continue implementing the courageous reforms and privatisations that have been agreed in a timely and effective manner,” Van Rompuy told reporters after talks in Athens with Greek Prime Minister George Papandreou. “There is no viable alternative to these reforms … We cannot and should not do the work for you.”

The EU’s president said Greece will emerge stronger from the package of measures that should have been implemented long ago, adding that Europe should not be blamed for the country’s plight.

“On the contrary, the Union is helping to preserve Greece’s future,” he said. “I know that this message is not always well understood, but it is the simple truth.”

Van Rompuy said that in all areas covered in his talks with Papandreou, there is “a need to ensure the proper balance between European solidarity and national responsibility.”

Athens has pledged to cut its runaway budget deficit from 15.4 percent of gross domestic product in 2009 to under three percent — where it should be under EU rules — in 2014.

But it remains unclear whether the government met its target for a 9.4 percent of GDP deficit last year. Late Monday, the finance ministry said overspending in the first quarter of 2011 widened by 7.8 per cent on the year, to reach euro4.7 billion (US$6.8 billion) on a cash basis. The finance ministry said that was euro9 million (US$13 million) more than targeted in this year’s budget.

Spending rose 3.5 per cent to euro15.8 billion (US$22.7 billion), while net revenues declined 8.1 per cent on the year to euro11.1 billion (US$16 billion). In the budget, the government aimed to have revenue of euro12.5 billion (US$18 billion). The figures do not include local authority and social security fund accounts.

Earlier Tuesday, Greece managed to borrow euro1.62 billion (US$2.34 billion) in short-term loans from financial markets. The auction of 26-week treasury bills had an interest rate of 4.8 per cent, slightly above the 4.75 per cent at a similar sale in March, the Public Debt Management Agency said.

The agency had originally been seeking to raise euro1.25 billion in the auction, but borrowed more as investor interest was strong — the auction was 3.81 times oversubscribed, compared with 3.59 times in March.

High interest rates have priced Athens out of the bond market, although officials have said the hope to issue new long-term debt from next year.