European Central Bank Governing Council member Axel Weber has said Greece may require assistance of up to €80 billion to avoid default.
The Wall Street Journal reported that Mr Weber also told legislators that Greece's situation was worsening and that "the numbers are changing all the time", citing a source.
Borrowing costs and the progress of talks with European and IMF officials will determine whether Greece triggers an international aid mechanism, Greece's finance minister George Papaconstantinou said today.
Greek borrowing costs hit a fresh high today and investors increasingly believe the discussions starting tomorrow will lead Greece to tap an aid package of €40-45 billion.
"There is no chance that Greece will be left high and dry in May. Greece will borrow either from the markets or from its partners," Mr Papaconstantinou told a news conference.
Greece sold €1.95 billion worth of three-month T-bills today but paid a high yield of 3.65 per cent. Mr Papaconstantinou said this brought the country's May borrowing needs to below €10 billion.
"The Greek government will decide on whether to ask the activation of the mechanism when it considers it is needed, and this will depend both on the borrowing conditions and the progress of the talks," he said.
The yield premium investors demand to buy 10-year Greek bonds rather than German debt rose to a euro lifetime high of 484 basis points, as uncertainty over the aid package showed little sign of easing ahead of tomorrow's meeting. [ID:nLDE63J130]
Mr Papaconstantinou said the talks would last at least 10 days and would focus on austerity measures for 2011 and 2012.
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.
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.
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.
Reuters/Bloomberg