Eurogroup tells Greece to cut spending further
Tue Nov 16, 2010 6:09pm EST
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Greece vows extra measures to meet targets
* Austria warns Greece over targets, aid
* Euro zone minister signal confidence in Greece
By
Marcin Grajewski
BRUSSELS, Nov 16 (Reuters) - Euro zone finance ministers told Greece on Tuesday to cut its spending more to meet budget deficit reduction targets agreed with international lenders as part of a bailout programme.
The European Union statistics office revised upwards this week the Greek budget deficit for 2009 to more than 15 percent of gross domestic product from 13.6 percent, which raised doubts over the country's ability to cut its shortfall to an agreed 8.1 percent this year.
Any overshoot this year will make it more difficult to meet targets for subsequent years, including a deficit below the EU's ceiling of 3 percent GDP in 2014.
"We stress in particular the need for further expenditure reductions, as well as acceleration and deepening of structural reforms...," the euro zone's 16 finance ministers said in a statement after a meeting in Brussels.
The targets were agreed with the European Commission, EU governments and the International Monetary Fund as a condition for a 110 billion euro ($149 billion) emergency fund for Greece to prevent the country's default.
Following the revision of the deficit figure, Austria's finance minister said Greece had not fulfilled its obligations under the EU-backed aid package, and that the Austrian government had not yet submitted its December contribution.
Greek Finance Minister George Papaconstantinou said he was ready for additional spending cuts to meet the 2011 targets, although he acknowledged this year's goals might not be met.
"So we are starting at the end of 2010 from a higher point than what we originally wanted. However, we will fully respect the 2011 targets and intend to take any measures that are necessary in that respect," he told reporters.
The euro zone ministers voiced confidence in Greece's fiscal efforts, saying they had been broadly on track, despite the likely overshoot for this year resulting from the revision.
"In this respect, we welcome the strong commitment of the Greek government to undertake the required additional measures in the budget for 2011, in order to confirm the ambitious deficit target of 17 billion euros next year," they said.
"We remain confident that the significant progress made during the course of this year will continue, allowing the consolidation of the Greek budget to remain on track."