Tags: EU | EU | Greece | Economy

EU to Rule on Greece's Budget Deficit Plan

Friday, 29 Jan 2010 07:32 AM

The European Union's executive said Friday that it would rule next week on Greece's program to reduce a ballooning budget deficit — but refused to comment on reports that a bailout plan is under discussion.

French and German officials have denied reports in the International Herald Tribune and Le Monde that they are in talks with other eurozone nations about a financial rescue package for Greece, which wants to borrow euro54 billion from bond markets this year to plug its budget gap.

EU spokeswoman Amelia Torres also refused to comment, saying it was "unrealistic" to talk about what would happen if Greece were about to default on its debt.

On Monday, Greece's debt agency reported strong demand for euro8 billion in government bonds — passing a key test of the government's ability to raise capital from wary markets. Investor worries, however, are forcing Greece to pay high interest rates to borrowers.

Markets and other EU governments were alarmed by Greece's sudden announcement in October that its budget deficit would hit 12.7 percent in 2009, more than four times the EU limit. The deficit was alarming in part because the Greek economy has done better than many others during the recession, indicating the government's financial troubles come instead from chronic ills such as tax evasion, shoddy statistics, and spending too much.

Greece's new government under Prime Minister George Papandreou has pledged to bring the deficit under the EU's maximum of 3 percent of gross domestic product by the end of 2012. Still, markets and officials remain skeptical Greece can make such drastic cutbacks.

The European Commission will say Wednesday whether Greece needs to do more to meet that goal and whether its economic policies are doing enough to increase its competitiveness.

Finance ministers from all 27 EU countries will discuss those recommendations in February — and can order Greece to take action.

The European Commission also said Friday that it will seek powers to audit Greece's statistics, as the country moves to overhaul a system that it says falsified the deficit figures last year.

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The European Union's executive said Friday that it would rule next week on Greece's program to reduce a ballooning budget deficit but refused to comment on reports that a bailout plan is under discussion.French and German officials have denied reports in the International...
EU,EU,Greece,Economy
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2010-32-29
Friday, 29 Jan 2010 07:32 AM
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