Barroso calls for finance ministers to back Greece deficit plan
Published 03/02/2010 | 05:00
THE European Commission will recommend today that EU finance ministers endorse the Greek programme to curb the country's budget deficit, president Jose Manuel Barroso has said.
The EU will institute "a completely new mechanism to monitor" Greece's budget cuts, Economic and Monetary Affairs Commissioner Joaquin Almunia said in an interview.
Athens will have to submit a progress report by March 16, with a second report due on May 15, followed by quarterly updates.
"The Greek authorities stand ready to immediately adopt additional measures if, in our monitoring process, we ask them for it," Mr Almunia said.
"A deficit of such a magnitude must be decisively corrected," Mr Barroso said. The planned correction of the deficit from 12.7pc of GDP to less than 3pc by 2012 "is feasible but subject to risks," he said.
Interest rates on Greek government debt rose again yesterday, having eased back from the 4pc excess over German rates reached last week -- a figure not seen since Greece still used the drachma in 1998.
"Fears that the further rise in Greek bond yields over the last week has stretched the public finances to breaking point may be a little over-done," economists at Capital Economics in London said yesterday.
"Nonetheless, Greece still faces an enormous challenge if it is to meet its financing requirements and step back from the brink of disaster."
Investors are demanding a yield of 6.75pc on 10-year Greek debt. Yields also rose on Spanish and Portuguese debt as Greece's finance minister said that those nations are facing similar challenges in paring their deficits.
The EU will also take a first step today towards legal action to force Greece to improve its reporting of deficit figures and other economic statistics.
The EC said on January 12 that "severe irregularities" in the nation's statistical data leave the accuracy of the deficit in doubt.