Pressure to Reform: European Union Puts Greece under Financial Surveillance
Debt-ridden Greece has come under increased pressure to implement tough austerity measures after the European Union announced plans to closely monitor the country's efforts to cut its enormous budget deficit. The new wave of belt-tightening could spark more protests by workers.
The Greek Parliament in Athens: The European Commission is putting pressure on Greece to sort out its deficit problem.
Pressure on Greece to get its public finances into shape increased Wednesday as the European Union announced unusually strict measures against the country. The European Commission, the EU's executive body, is to put Greece under closer monitoring than any euro-zone country has ever been subjected to and also criticized Athens for faulty reporting of statistics.
Almunia said that the Commission was endorsing the program, which he described as "ambitious" but "achievable." "We know that the implementation of the program will not be easy," he told reporters. "It's extremely challenging, but absolutely necessary and urgent."
However, the EU wants Greece to do even more and is urging it to adopt a "comprehensive structural reform package" that would include cuts in pension spending and reform of the health-care system. The Commission also wants Greece to increase the competitiveness of its economy by making its labor market more flexible, among other demands.
At 12.7 percent of GDP, Greece's budget deficit is more than four times higher than the maximum of 3 percent allowed under euro-zone rules. The European Commission's recommendations are aimed at bringing the country's deficit under 3 percent of GDP by 2012.
Almunia stressed that Greece's progress in implementing the plans would be rigorously monitored through so-called "economic surveillance." Athens will be required to submit a first report in mid-March and will then need to submit quarterly progress reports beginning in mid-May.
It is the first time that the Commission is using such a strict monitoring system, but Almunia insisted the program "is needed given the circumstances." He said Greece must be prepared "to adopt additional measures" if the country was not on track to reduce its budget deficit by the agreed deadlines.
The Commission also announced that it was launching an infringement procedure to ensure the Greek authorities "comply with their duty to report reliable budgetary statistics." The move was prompted by the Greek government's sudden revision last October of data relating to its 2008 deficit.
More Strikes Ahead
The country is under massive pressure from financial markets and other EU members to get its finances under control. The budgetary crisis has caused the euro to fall against the dollar in recent weeks and increased the cost of borrowing for the Greek government amid fears it could default.
There is speculation that Greece may have to be bailed out by other EU members -- something the country insists will not be necessary -- and there are also concerns that the country's woes could have a knock-on effect on other euro-zone members with high deficits, such as Portugal, Italy, Ireland and Spain.
dgs -- with wire reports
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