May 27, 2011 / 8:08 PM / in 7 years

UPDATE 1-Sweden wants Greek budget cuts of 15 pct of GDP

 * FinMin: Greece should "swallow medicine we prescribed"
 * Will take Greece 5-7 years to regain fiscal credibility
 * Wants Greece to create German-style Treuhand
 (Adds details, background)
 BERLIN, May 27 (Reuters) - Swedish Finance Minister Anders
Borg wants Greece to follow the example of Baltic countries
like Estonia, where budget cuts equated to 15 percent of gross
domestic product, he told German newspaper Die Welt.
 "Only after Greece achieves a very substantial surplus can
we start to talk about a reprofiling or similar relief," Borg
said in comments to be published on Saturday, insisting that
the Greeks "swallow the medicine we prescribed" for them.
 Unlike its neighbour Finland, Sweden is a European Union
member state that has opted not to give up its own currency,
and -- in that sense at least -- the manufacturing and
export-strong country may have less of a vested interest in the
euro's future than Germany would.
 On Wednesday, Estonian Prime Minister Andrus Ansip told
Reuters Insider Television that Greece should copy the fiscal
austerity measures of Latvia, an IMF aid recipient. For more
see [ID:nLDE74O244].
 Under current plans, Greece plans to reduce its budget
deficit from 15.4 percent of gross domestic product in 2009 to
2.6 percent in 2014, along the way selling some 50 billion
euros worth of assets by then. [ID:nLDE7421WT]
 Borg demanded the Greeks immediately commence with reforms
to their social security system.
 "It simply can't be that Greeks continue to retire at such
an early age. They must stay longer in the labour market, work
and naturally pay taxes," he said.
 "Greece will need five, six, maybe even seven years to
regain its fiscal credibility," the Swedish finance minister
added, implying it could take much longer before Athens could
resume issuing government bonds in capital markets.
 Borg also pushed for Greece to create an independent
institution charged with running the privatisation plan,
similar to the Treuhand that Germany created to sell East
German state assets.
 "It looks for the moment as if Greece owns assets of 300
billion euros. No one can sell such a tremendous amount in a
short time -- that's why you need to have an institution that
can implement that over the long term," Borg said, adding it
could take five to 10 years to complete the privatisation.
 (Reporting by Christiaan Hetzner, additional reporting by
David Mardiste in Tallinn; Editing by James Dalgleish)

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