Pressure mounted on Greece yesterday to take fresh, drastic action to slash runaway debts, but Athens demanded first that EU partners reveal the terms of any eventual bailout.

As eurozone finance ministers met seeking to protect their under-threat currency, the new man in charge of economic and monetary affairs at the European Commission, which polices EU member states' budgets, warned that "risks... are materialising".

"There is a clear case for additional measures," said Finland's Olli Rehn.

Greece is already committed to reducing its public deficit by four percentage points this year, from 12.7 per cent of national output last year, using a range of emergency measures.

"We expect that in due course... the (Greek) government will take additional measures to reach this objective," Mr Rehn added, suggesting disappointment for markets seeking concrete Brussels aid plans.

However, Greek Finance Minister George Papaconstantinou called instead for "more explicit" EU backing.

Mr Papaconstantinou asked reporters: "If we announce today new measures, will that stop markets attacking Greece?

"My guess is that what will stop markets attacking Greece at the moment is a further more explicit message that makes operational what was decided last Thursday" by European heads of government."

He said that a political declaration signed by all 27 EU leaders had thrown a protective arm around Greece and indicated that central EU backing would be forthcoming if required.

Now was the time to "work out the mechanism so that, if necessary, the mechanism will be there," he added.

Mr Papaconstantinou said Athens would wait for the first European Commission assessment of its corrective measures next month.

Only then might "additional measures" be appropriate.

In a sign of a hardening mood in Europe's biggest country, German Finance Minister Wolfgang Schaeuble said ministers were due to "examine and evaluate" fresh additional measures during yesterday's discussions.

The fact that German voters are wary of coughing up for weaker European economies means Berlin is seeking more Greek concessions to be agreed with the commission, the European Central Bank and the International Monetary Fund.

Austria's Josef Proll also warned that if the current action taken by Athens proves insufficient, "(it) would certainly have to do more," stressing that Greece could not be "released of its obligations" as a eurozone member.

Luxembourg Prime Minister Jean-Claude Juncker, who leads the grouping of 16 euro countries in monetary matters, said that failure to make early headway would require new thinking next month. If, by mid-March, "Greece is not on track, additional measures will be necessary," he said.

Spanish Finance Minister Elena Salgado, who will chair talks among all 27 EU nations today but whose own country is also labouring under heavy debts, said the call for extra measures "is something that has to be discussed."

Moody's credit rating agency calculates that Greece must allocate 15.1 per cent of its revenues to service its debts this year, twice the ratio for Spain and Portugal. Greece's ballooning public deficit has seen its debts shoot up to about €300 billion, or 113 per cent of gross domestic product. International share and currency markets are watching closely to see the decisions the EU reaches. The German newspaper Handelsblatt said the ECB is calling for bigger budget cuts, increased value added tax for consumers and an even higher tax on luxury goods and energy.

The Greek government's spending cuts and campaign against waste and corruption have sparked strikes and protests, but it has insisted that by 2012 it will bring its deficit below the eurozone's three per cent limit.

At a summit last Thursday, the EU stopped short of committing actual funds to prop up the country, or more accurately the euro.

Ministers may also discuss modalities for any eventual aid deemed necessary, through bilateral loans or guarantees.

Independent journalism costs money. Support Times of Malta for the price of a coffee.

Support Us