(Repeats story published late on Wednesday)
* Qualifies earlier comment on inability to close gap
* Says "extremely difficult" for Greece to cut deficit
* Says each percentage point of deficit cuts is tough
By Robert Mueller
PRAGUE, Feb 24 (Reuters) - The Czech finance minister
softened comments doubting Greece's fiscal plans that helped
push that country's bond spreads higher on Wednesday, saying he
had meant to suggest Athens faced an "extremely difficult task".
Eduard Janota, a member of the non-euro zone EU member's
interim government, said he was speaking from his experience of
difficulties with fiscal consolidation in the Czech Republic,
whose deficit jumped to around 6.6 percent last year.
Earlier at a business breakfast, Janota said: "They are
claiming they are able to lower the deficit from 13 percent to 3
percent in three years.
"In my eyes, it is nonsense. I know that lowering the
deficit by one percentage point in the Czech (Republic) is a
great problem."
Later on Wednesday, Janota called Reuters to explain he had
not meant to suggest Greece would not meet its target and that
his comment was intended to convey that such consolidation would
be impossible in the Czech Republic.
"Seen through my eyes, it is an extremely difficult task,"
he told Reuters. "If I were to (try to) carry this out in Czech
conditions, it would not be possible."
Janota's earlier comments moved the euro zone debt market,
sending German Bunds up and widening Greek spreads as investors
switched to safer instruments. []
Greek debt came under the microscope again when rating
agency Standard and Poor's said it might downgrade its BBB+
rating on Greece by one or two notches within a month.
[]
The rating agency said it viewed additional deficit-reducing
measures as a reasonable step toward reducing the debt burden
given the divergence between deteriorating growth prospects and
overly optimistic growth assumptions for 2010.
SLASHING THE DEFICIT
Greece has pledged to slash the deficit by 4 percentage
points this year to 8.7 percent amid market turbulence that has
sent government bond yields up as investors worried about the
government's ability to raise new debt.
Greece, a euro zone member, must prove to Brussels by
mid-March that it can meet its ambitious budget targets.
Other euro zone member states led by Germany have said
Greece must help itself and cannot expect others to bail it out.
[]
Later in the discussion, Janota repeated the speed of budget
consolidation promised by Greece was "nonsense", and added that
it was "impossible without some drastic, or even draconian
measures".
The original comments were unusually harsh words from
Janota, who chose more cautious language when asked about Greek
budget plans in a Reuters interview last week. []
Janota is a budget veteran who has served in the Czech
finance ministry since the 1970s.
"Lowering the deficit in three consecutive years, that is a
dramatic issue. And they cannot rely on taxes, because if one
hikes taxes, especially direct taxes, which I do not recommend,
he will undermine competitiveness," he said.
"This has other contexts, lack of investor interest, and
economic decline and unemployment."
(Writing by Jan Lopatka; Editing by Toby Chopra, John
Stonestreet)
