GREECE COULD face pressure to take tougher austerity measures when European and International Monetary Fund (IMF) officials discuss an aid package this week, a senior EU official said, as a delay in the talks pushed Greek borrowing costs to new highs.
The euro zone member hopes to begin talks with the mission tomorrow on a policy programme that investors are increasingly sure will lead the debt-ridden country to tap the biggest bailout ever attempted.
Originally scheduled for today, the meetings were delayed by a volcanic ash cloud that has wreaked havoc with transport across Europe, adding to investor uncertainty, pushing up Greek bond yields and bank shares down.
Greece has already cut public sector wages, frozen pensions, and raised taxes to try to cut its budget deficit by around a third to 8.7 percent of GDP this year. Eurogroup chairman Jean-Claude Juncker told Greek financial website Euro2day that the measures for 2010 were “pretty ambitious and look credible” but said there could be more after talks with the European Central Bank, the European Commission and the IMF.
“During our talks with the troika on the Greek package, the possibility of new measures will be discussed,” he was quoted as saying in the interview.
The Mediterranean country of 11 million has yet to ask for activation of the EU/IMF aid safety net, estimated at €45 billion in the first year. Greek prime minister George Papandreou said: “If the country’s interests require us to activate the support mechanism we will do it without hesitation.”
But the prospect has raised anxiety among Greeks fearing more austerity. About 200 workers rallied outside the finance ministry holding banners reading “IMF Go Home” . – (Reuters)
