EU ministers pile on the pressure

European ministers put pressure on Greece yesterday to take further steps to bring a swollen debt under control but sources in Athens played down talk of any additional painful measures being imminent. At a European Union meeting, finance ministers from Germany, Austria and Sweden led the charge, 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.» That, and a statement issued by the ministers after the meeting, clearly suggested that the 30 days they have given Greece to prove itself before reporting back will in any case end with demands for more budget cuts or tax hikes, or both. 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. March 16 is the deadline set by the 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. Finance Ministry sources insisted yesterday that the government is focused on achieving steps set out in the Growth and Stability Program despite media reports of an increase in value-added tax and a steep cut in public sector salaries being prepared. «We are not looking at any additional measures right now,» a Finance Ministry source told Kathimerini English Edition. Finance Minister Giorgos Papaconstantinou said in Brussels yesterday that Greece is ahead of its deficit-reduction targets and will not require any bailout from the European Union. Preliminary figures show a surplus of 574 million euros in January, buoyed by revenue from a one-time tax on corporate profit, compared with a deficit of 1.55 billion euros a year earlier. Premium to hold Greek debt rises The premium demanded by investors to buy Greek bonds rather than German benchmark debt rose yesterday after the 27-nation European Union disappointed investors by failing to outline how it might help Greece. The 10-year Greek/German bond yield spread widened by 30 basis points on the day to 335 bps versus Monday’s 305 bps and was at its widest since February 9. It later narrowed to about 320 bps. The equivalent Portuguese spread widened 21 bps to 143 bps, while the Irish equivalent spread over eurozone benchmark Bunds widened by 8 bps to 153 bps ahead of the results of auctions of 2014 and 2020 debt. Both spreads were at their widest since February 10. The cost of insuring Greek bonds against default also rose, to 369,800 euros per 10 million euros of exposure from 354,300 euros late on Monday, according to five-year credit default swaps from monitor CMA Datavision. On the single currency front, the euro rose against the dollar for the first time in five days yesterday as investors bet recent losses due to Greece’s budget turmoil were too rapid to sustain. The dollar fell 0.6 percent to $1.374 against the euro in early New York trade.

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