Eurozone Gives Greece 30 Days to Show Good on Deficit

Euro zone states urged Greece on Monday to announce more deficit-control steps by mid-March if needed, but said nothing new of last week's pledge to defend the country if debt market pressures spin out of control., Reuters 2/15/2010 7:07:34 PM

At talks among finance ministers, Greece asked the euro zone to bear with its fiscal plans as announced, and warned that last week's offer of support by EU leaders may not be enough to stem a debt market squeeze on governments in the region.

Greece is the first country in 11 years of European monetary union to require such a pledge after fears over its bloated debt sparked a market attack that drove bond yields up and the euro down, fuelling government fears of a broader market shutout.

"Financial markets are completely wrong if they think they can destroy Greece," Jean-Claude Juncker, Luxembourg's prime minister and chairman of the finance ministers' meeting in Brussels, told a news conference.

He and others went to lengths to say Greece had 30 days to prove its plans were off to a convincing start and he said that Athens could count on unspecified support if that was not the case and markets refused to give it breathing space.

Greece's Socialist government is fighting an uphill struggle to get its finances in order, restore credibility in other capitals and financial markets alike, and prove that the data it publishes on its economy is no longer what Swedish finance minister Anders Borg described as "basically fraudulent."

Greece would have to prove on a day-to-day basis between now and March 16 that it was on track and, if short of the mark, come up with proposals for further measures to meet its target of a four-percentage-point cut in the deficit this year.

Greek Finance Minister George Papaconstantinou defended his government's plans to slash the public deficit from 12.7 percent of gross domestic product to less than three percent by 2012, starting with the four-point cut in 2010 that has sparked strikes over civil service pay cuts and planned pension curbs.

In financial markets, where governments go for much of their funding, Greece faces hurdles, with two lots of more than 8 billion euros of government bonds to refinance in April and May.

Papaconstantinou said urging Greece to do more right now made no sense and suggested ministers develop on the pledges of support that leaders made after emergency talks last Thursday.