Euro zone nations agreed Friday to tighten joint oversight of the economies in Europe's currency union in an effort to stem a government debt crisis that has already forced them to make billions of euros in standby loans available to troubled Greece if it can't borrow from markets.
Jean-Claude Juncker, the head of a group of finance ministers from the 16 countries that use the euro, said they would start discussing how member economies were faring, as a step toward tackling wider problems beyond the group's limited focus on debt and deficit levels.
Spain and Finland would come up for review first, followed by Portugal and Luxembourg, he said.
Both Spain and Portugal have rising debt levels and have attracted some attention from markets looking to see if Greece's debt problems could spread to other vulnerable euro economies which are facing high unemployment and sluggish economic growth.
Portugal received a warning from the European Union's executive commission this week that it might need to make bigger budget cuts if a hoped-for economic recovery fails to provide extra revenue the government is counting on.
Markets have hiked Greek borrowing costs because they believe the country might be unable to repay debt. Greece needs to borrow some 54 billion euros ($73.04 billion) this year, 11 billion euros of that next month and says the high costs could force it to seek a bailout from euro zone nations and the International Monetary Fund.
Last week, it secured a pledge for some 30 billion euros in loans from other euro zone nations — with possibly another 15 billion euros from the IMF yet to be agreed
The government has called in EU and IMF officials for Athens talks on Monday but insists that this is not a signal that it will formally request a bailout within days.
Greece had an opportunity to trigger the financial lifeline at the Madrid talks between euro zone finance ministers on Friday morning — but did not use it. Juncker said they "didn't put forward a request."
Greece had hoped that news of the last-resort loans would reassure markets. Initially it did — but spreads, or the difference between interest rates, widened in recent days after Germany said its share, the largest at 8.4 billion euros, would require lengthy parliament approval.
Greece on Thursday asked the European Commission, the European Central Bank and the International Monetary Fund to step up work on the aid package. It insisted that this was not a signal that it would demand a bailout within days.
Greece's flagrant flouting of EU debt and deficit limits has triggered drop in the euro's value against the dollar and exposed the flaws in the loose way euro zone governments are supposed to coordinate their economies.
Most euro zone nations are now running deficits above the EU's maximum 3 percent and are promising to reduce those over the next few years.
The EU's economy commissioner Olli Rehn said he wanted to check euro zone states' budget spending before parliaments do and should monitor how euro member economies are performing. This could prevent a country like Greece overspending and failing to reform its economy.
He criticized euro zone members for "rather optimistic" assumptions that the economy would bounce back quickly — warning that many of them may need to increase budget cuts if they aren't on track to bring down deficits.
EU officials are also warning that richer euro nations, like Germany and the Netherlands, need rely less on exports and consume more, saying they could help rebalance wide differences in the euro area by stoking domestic demand and investment.
Belgium and Ireland's ministers missed the euro zone talks as volcanic ash held up flights in northern Europe. Swedish and Danish ministers were also due to skip the broader meeting of all 27 EU members starting later Friday.
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