Update: Trichet: Crucial For Greece To Hit Deficit Targets 4  FEB   --Adds comments from Trichet on government deficits in EMU BRUSSELS - It is absolutely crucial that Greece attain the targets set out in its stability plan and bring its budget deficit back under 3% by 2012, European Central Bank President Jean-Claude Trichet said on Thursday. --Adds comments from Trichet on government deficits in EMU BRUSSELS (MNI) - It is absolutely crucial that Greece attain the targets set out in its stability plan and bring its budget deficit back under 3% by 2012, European Central Bank President Jean-Claude Trichet said on Thursday. Greece's budget deficit currently stands at 12.7% - the highest deficit in the eurozone - causing the market to worry that the southern European state could default on its debt. Spreads on Greek sovereign debt have widened sharply as a result, raising borrowing costs for Athens. The Greek government has outlined plans to curb its deficit, which the European Commission has called "ambitious" and promised to monitor very closely. "I would say that the position of the ECB is the following: the Governing Council approves of the medium-term goal that has been fixed by the Greek government to get (the budget deficit) back to less than 3% in 2012," Trichet said. "Now we expect and we are confident that the Greek government will take all the decisions that will permit it to reach that goal." He added: "They have to reach the goals that they have fixed themselves, it is absolutely crucial, and we expect and we are confident that they will take the measures [necessary]." Trichet said the measures taken by the Greek government last Tuesday - adding an extra tax on oil and freezing public wages - are "steps in the right direction." "In any case the deficit target for 2010 has to be attained, as well as the final goal," he said. "This strategy is crucial in our eyes." He hinted that the ECB would be following the developments closely, saying, "We are alert, as is the Commission." EUROZONE SOLIDARITY HELPS FINANCING Trichet declined to comment on recent market selloffs of Greek, Spanish and Portuguese debt. But he seemed to imply the markets were overstating the degree of risk. "It is not necessarily very well known, the kind of solidarity that the eurozone has," he said. He said countries in the monetary union were party to "ex-ante a considerable help." The ECB chief also noted that the eurozone offers countries "very, very easy financing of their current account deficit." "It is given ex-ante in our case," he said. "That is the reason why we call for the stability and growth pact to be respected in all cases." ALL COUNTRIES MUST CONTROL DEFICITS "It is a very, very strong call for having full respect of the Stability and Growth Pact, full respect of the excessive deficit procedure, and you know that each country has its own goal in terms of going down to below 3%, and we consider of course that all this is crucial," Trichet said. "High levels of public deficit and debt place an additional burden on monetary policy and undermine the Stability and Growth Pact as a key pillar of Economic and Monetary Union," he added. "Countries will be required to meet their commitments under the excessive deficit procedures. Consolidation of public finances should start in 2011 at the latest and will have to exceed substantially the annual adjustment of 0.5% of GDP set as a minimum requirement by the Stability and Growth Pact. A strong focus on expenditure reforms is needed," he said. --Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com [TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$] 2/4/2010 9:44:00 AM