ATHENS — The EU’s financial affairs chief turned the screws on Greece on Monday demanding more painful, permanent budget cuts soon, which he said would secure the bloc’s endorsement and break world markets’ stranglehold on the debt-ridden nation.
Finance Commissioner Olli Rehn refused to confirm speculation that the European Union or heavyweights France and Germany are preparing a financial lifeline for Greece, stressing that Athens has not requested such help.
But he added that “the euro-area is ready to take determined and co-ordinated action to insure financial stability in the euro-area.”
Rehn spoke at a news conference in Athens, following talks with Prime Minister George Papandreou and other top officials on Greece’s existing plans to cut bloated budget overspending by four per cent of gross domestic product this year.
He said additional action was necessary “in the coming days,” and it was up to the Greek government to announce extra, permanent spending cuts.
“In my view, the markets should be convinced that Greece will be able to meet its targets of deficit reduction when the EU Commission, the European Central Bank and the International Monetary Fund can endorse such a plan and ensure that this program meets the required targets,” Rehn said.
Market backing for the plan would reduce Greece’s extremely high borrowing costs — about twice those of Germany — and give the centre-left government breathing space to focus on structural reforms.
Earlier in the day, Finance Minister George Papaconstantinou pledged to do “whatever is necessary — and that includes new measures” to cut the deficit, which is the highest among the 16 countries that use the common European currency.