EURO-ZONE finance ministers imposed a 12-day deadline on the Greek parliament to back a drastic new austerity plan, saying MPs should support the measures before they release a €12 billion loan.
The deadline comes as Greek prime minister George Papandreou faces a crucial confidence motion in Athens tonight, a vote which will determine whether he survives in office to pursue the tax and spending measures he has agreed with the EU-ECB-IMF troika.
The vote follows a cabinet reshuffle last week in which Mr Papandreou sacked his finance minister and installed Evangelos Venizelos, his chief internal rival within the Pasok Socialist party, in that portfolio.
As the euro-zone ministers step up pressure on the Greek authorities, the troika is sending a new mission to Athens to ensure the plan is delivered. The last inspection finished just over a fortnight ago.
"The mission is to verify that the Greek government is indeed implementing the agreed, revised draft memorandum and to ensure that we have fully the same understanding by the EU-IMF troika and the Greek government on the text that will be submitted to the Greek parliament for a vote before the end of June," European economics commissioner Olli Rehn told reporters in Luxembourg.
While Mr Papandreou has been warning that Greece will run out of cash next month if it does not receive the €12 billion loan, finance ministers are awaiting parliamentary approval of the new austerity plan before releasing the cash.
The European ministers have agreed in principle to establish a second international bailout for Greece but this, too, is conditional on parliamentary support.
Greek MPs will vote on the austerity plan next Thursday, five days before euro zone ministers gather for a new round of talks on the situation on July 3rd. They will take stock of the situation at this meeting and plan to prepare the ground for a second bailout.
This, in turn, has led the IMF to hold back on the release of its €3 billion portion of the €12 billion loan.
The IMF oared into the debate yesterday, saying in Luxembourg that it must be certain the Greek recovery plan is on track and will be financed by the euro zone before it pays out its €3 billion portion of the loan.
Although the IMF was widely held in recent days to have agreed in principle to release the €3 billion, acting managing director John Lipsky said the conditions were not yet in place to proceed.
"We will all require assurances that the programme is financed and that involves assurances from our euro-group partners that adequate finance is available," he said.
"That needs to be done before we can move forward and we are hopeful that those conditions will be met with alacrity."
At the end of several hours of talks yesterday on the debt crisis, Mr Rehn acknowledged "reform fatigue" in Greece and "support fatigue" in certain donor countries.
"The greatest deal of responsibility lies on the shoulders of the new Greek government but also all Greek political leaders and parliamentarians," Mr Rehn said.
Luxembourg's prime minister, Jean-Claude Juncker, who leads the group of euro-zone finance ministers, said Mr Venizelos "is sincere, credible and honest and he knows that he will have to demonstrate that so that on the 3rd of July the euro group will be in a good position having heard from the Greek parliament of their decision that they have adopted all the appropriate measures. I'm sure that they will do that."
He did not say what would happen otherwise.
