Europe urges Greece to hasten pace of reforms
BERLIN - European economic officials said yesterday that Greece must make deeper, faster budget cuts and economic reforms, pushing the debt-strapped nation to meet promised targets to free up more international help.
With the country perhaps within a few weeks of default on its international loans, top Greek officials conferred with European and international monetary officials about what the country needs to do to free $11 billion of upcoming aid.
Talks ended late last night in Athens and were to resume today. Evangelos Venizelos, Greece’s finance minister, said in a news release that the talks had been productive.
Europe has been battling for nearly two years to show convincingly that Greece and other heavily indebted nations such as Italy and Spain will pay all their bills. World markets remain skeptical, and have pushed up borrowing costs for governments and banks throughout the 17 nations that share the euro as a currency. The European Central Bank released new data yesterday showing it has purchased more than $200 billion in government bonds, much of it in recent weeks to hold down the interest rates paid by Italy and Spain.
The issue is a key concern to US policy makers, who worry that a Greek or other government default in Europe could trigger bank failures, throw the region back into recession, and drag down the US economy in the process.
The head of the International Monetary Fund’s mission to Greece said yesterday that the country’s pace of reforms had been slowing, and he called for the government to pick up speed. Greece has promised to reduce the size of public payrolls and sell off inefficient state-owned enterprises, but it has failed to follow through as quickly as expected.
Markets were down around the world on fears that Greece would have difficulty qualifying for the additional bailout money.
European officials and the IMF won’t release the next round of emergency lending until Greece details how it plans to meet its deficit-reduction targets.
European economics officials met during the weekend to discuss the Greek debt crisis but went home with no firm deal to authorize the money, saying that a final decision would have to wait at least two more weeks.
Greece has proposed painful measures to meet steep targets that it agreed to as a condition of receiving the bailout money, including deep pay cuts, furloughs and layoffs in the public sector, and higher taxes.
So far, many of the proposals have remained just that, although they have provoked violent opposition in the streets of Athens.