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Pressure on Greece over 2014 budget deficit as Spain signals bailout exit

EUROGROUP chairman Jeroen Dijsselbloem threw down the gauntlet to Greece yesterday, declaring it needed to do more to plug a €2bn shortfall in its budget for next year as Spain declared it would be exiting its bailout.

While the focus was on Ireland and its 'clean' bailout exit, the Dutch finance minister kicked off the gathering of eurozone finance ministers by urging the Greek authorities to step up to the plate and tackle the fiscal shortfall in next year's budget.

The troika want the Mediterranean state to implement more austerity measures to bridge the financing gap, but Athens disputes the extent of the shortfall.

"It's crucial that Greece steps up a little bit their efforts in order for us to reach an agreement," Mr Dijsselbloem said.

A team of officials from the troika of the International Monetary Fund, the European Commission and the European Central Bank visits Athens regularly to check on progress on its bailout commitments and decide whether to release subsequent loan tranches, without which Greece would default.

The latest inspection began in September but was paused, only to resume at the beginning of this month, after Athens provided the lenders with information enabling them to discuss the financing of the 2014 budget. But the talks have made no progress since then.

The coalition government argues it deserves some slack after making the biggest budget deficit reduction ever seen in the eurozone. Greek President Karolos Papoulias said his country would not yield to international pressure to impose more austerity.

More positively, Spain said its banking bailout line will be fully shut down at the end of the year, with no more needed.

Each of the so-called programme countries were discussed at the meeting yesterday, including Ireland and Spain.

"The closure of Spain's banking bailout is good news for both the Spanish and the European economy," said the country's finance minister Luis de Guindos. He described it as a successful programme that managed to put the country's lenders back on track.

The eurozone offered up to €100bn to help recapitalise Spanish banks last year, but Madrid borrowed only €41bn in exchange for reforms and close international monitoring.

Mr Dijsselbloem said it "certainly looks very good" when asked prior to the meeting if Spain was exiting its programme. "We'll talk about it with the Spanish minister and the troika institutions and we'll come to a positive decision I'm quite sure," he said.

The focus will shift to banking union today as all 28 finance ministers from across the European Union gather.

The focus of the discussions, which are expected to run late into the evening, will be on the so-called Single Resolution Mechanism, EU-wide rules to deal with failing banks.

Irish Independent