Greece offers further cuts to EU, starting in March

Greece promised to adopt further austerity measures in March if current budget cuts prove insufficient, Eurogroup president Jean-Claude Juncker said at the end of a meeting Monday with euro area counterparts, dpa reported.

Ministers endorsed a pledge by Greek authorities to trim the deficit from 12.7 per cent of gross domestic product (GDP) in 2009 to the 3 per cent level foreseen in the euro area in 2012, with a 4- percentage-point deficit reduction to take place in 2010.

In an apparent effort to keep up the pressure on Athens, they also approved a draft declaration to be adopted on Tuesday by all 27 EU finance ministers. In it, they state that "Greece shall announce, in the report to be presented in March 16, 2010, measures additional to those provided" if "risks materialize" for its deficit reduction targets.

"We can help Greece to overcome these difficult times provided Greece is willing to help itself by taking bold and determined action," said EU economy commissioner Olli Rehn.

Ministers reaffirmed a promise issued by EU leaders last week "to safeguard financial stability" of the single currency only "if needed."

But Juncker said contingency plans to bail out Greece or any other eurozone country in crisis would not be spelled out.

"We do not feel it would be wise to have a public discussion on those instruments. But, were they to be necessary, rest assured they will be made available," he stressed.

The Luxembourghish leader denied Athens was being left to fend for itself.

"The Greeks will not be simply left to the mercy of the markets. ... The markets are completely wrong to think they can destroy Greece," he said.

The European Commission endorsed Greek budget cuts on February 3, though it judged some economic forecasts on which they were based to be optimistic. To avoid slippages, the EU executive recommended setting up a monthly monitoring system on Athens' actions, expected to produce its first report in March.

Eurogroup ministers welcomed proposals by the commission to give the EU's statistical arm, Eurostat, audit powers over figures produced by national governments, in a bid to avoid a repetition of the scandal created by Greece in October.

A similar proposal was rejected by euro area governments in 2005.

"I apologize to the world at large for not being able to prevent a bad decision from being made," Juncker told journalists.

In recent years, Athens was able to hide the extent of its budget deficit from eurozone partners by presenting Eurostat with heavily massaged figures.

Incoming Greek Finance Minister George Papaconstantinou said the EU could have spotted the problem earlier, as a Bank of Greece report indicated in August that the country's deficit was set to run into double-digit percentages in 2009.

"This does not take away our responsibility," he said. "But I think it colours the discussion, and it should."

Greece was coming under additional fire as press reports indicated that investment banks from the United States helped Athens to dissimulate its budget shortfall in 2001, using so-called currency swaps.

A spokesman for Rehn said that Eurostat was unaware of this and had asked Athens to provide information "by the end of February."

Papaconstantinou said such operations "were legal at that time" but have since been discontinued because "they were made illegal" by Eurostat. "Greece was not the only country to use them," he said.

Monday's meeting delivered a verdict on the ECB's next vice president, replacing Greece's Lucas Papademos on June 1.

Portuguese central banker Vitor Manuel Ribeiro Constancio emerged as the winner, beating competition from Luxembourg's Yves Mersch and Belgium's Peter Praet.

Decisions of the 16-country Eurogroup on Greece and the ECB appointment were expected to be formally ratified Tuesday, when all 27 EU finance ministers are to meet in Brussels.