The turbulence on the markets is the result of the Greek economy's loss of credibility inherited from the preceding New Democracy (ND) government and acts of profiteering, finance minister George Papaconstantinou said on Friday, adding, however, that profiteering actions do not impact the Greek public sector since it does not have immediate borrowing needs, while the 2010 borrowing program is smaller than that of 2009.

   Replying to press questions on recent reports by international financial houses on the Greek economy, Papaconstantinou noted that there are both negative and positive reports regarding the problems of the economy, and stressed that the problems are not new, but long-standing ones. He added that the reports by certain financial firms do not objectively assess the problems existing in Greece's economy.

   The minister further noted that the efforts to solve those problems were beginning now, by the new government. He stressed that the efforts will be consistent, with a dual goal: first, to reduce the fiscal deficit and, second, to boost development.

   Questioned in the increase in the spreads of the Greek state bonds in recent days, Papaconstantinou explained that these spreads have increased in all countries similar to Greece.

   On the government's more general planning, Papaconstantinou said that the determination, as well as a plan, existed, while specific moves are being made to support growth and incomes, and to consolidate a healthy fiscal environment.

   In that framework, he continued, a dialogue has commenced on reforming the social security system, while a broad dialogue will open in the next few days on reforming the taxation system. In addition, Papaconstantinou said, all the ministries have commenced efforts to contain the public expenditures.

   Papaconstantinou also conferred on Friday with Bank of Greece (BoG) governor George Provopoulos as part of his regular meetings for exchanges of views on the Greek economy and the developments in and prospects for the Greek banking system.

   Provopoulos told reporters afterwards that the Greek banking system is healthy and stable, adding that the capital adequacy indices are high, improving, and higher than those of banks in other countries.

   He explained that the recent capital increases by many major banks were concluded successfully, noting that this reflects the confidence of the international markets in the Greek banking system.

   Provopoulos further said that the Greek banks are now able to disengage themselves from the liquidity-boosting plan for the economy as of next year.