European Union finance ministers last week gave Greece a month to prove that it is able to get its public finances back on track, as Athens insisted it is up to the job and will not need to take any additional measures.
Following the Ecofin meeting in Brussels, the ministers said in a statement that Greece must show by March 16 it is on its way to cutting its public deficit by 4 percent of gross domestic product this year.
Greek Finance Minister George Papaconstantinou after the Ecofin meeting said that Greece is ahead of its deficit-reduction targets and will not require any bailout from the European Union.
“It’s a matter of credibility for the country,” he told reporters. “The execution of the Greek budget for the month of January is going quite well. We actually have a surplus.”
March 16 is the deadline set by European finance ministers both for Greece to show its plan is being rolled out effectively and for them to decide what should happen next as they seek to sort out Athens’s crisis and prevent any broader shutout in financial markets.
Athens has announced fuel tax increases, cuts in public sector pay and pension reforms as it strives to deliver on a commitment to reduce its public deficit from 12.7 percent of GDP to less than 3 percent in 2012, starting with a four-point cut this year.
“It’s clear that we are all in this together. We won’t abandon Greece,” said French Finance Minister Christine Lagarde — who would likely lead a potential bailout along with Germany.
“Greece has to actually deliver and is beginning to deliver. Greece has to demonstrate on a day to day basis .. that it is committed to do what it takes,” she told reporters.
Luxembourg Prime Minister Jean-Claude Juncker, who led the Ecofin talks, said Greece has agreed to take further action if it looks like it can’t hit the target.
“On March 16 we will check to see whether Greece is achieving the targets it has set for itself,” he said.
If it isn’t on course, eurozone finance ministers — except Greece — would then vote on whether tougher action was needed and “would impose on Greece” extra measures, he said.
However finance ministers from Germany, Austria and Sweden were not as generous, with Germany’s deputy finance minister saying Greece should mimic Ireland and Latvia, both of which are slashing spending and wages heavily.
“We made it clear the ball is in Greece’s court,” said Joerg Asmussen. “Additional measures by Greece are needed.”
The ministers said nothing of specific support measures or aid, opting instead to pile further pressure on Greece in return for the promise to provide support if things get out of hand.
“The pressure on Greece to consider further measures by March 16 has clearly increased,” Austrian Finance Minister Josef Proell said, adding no support measures had been agreed so far.