Belfast Telegraph

Saturday 15 March 2014

Greece given two days to come clean on euro deals

Crisis-hit Greece has two days to explain its use of complex financial deals to mask debt and just a month to prove that its drastic budget cuts go far enough to reassure markets and EU governments.

Greece's troubles have plunged the 16 nations that use the euro into a crisis by breaking rules on debt and deficit that underpin Europe's currency union amid worries that its problems could be even bigger because its public finance figures cannot be trusted.

The European Union's commissioner for economic and monetary affairs, Olli Rehn, said he wanted the Greek government to supply answers by Friday on how it used currency swaps and how that affected debt and deficit figures.

EU finance ministers also gave Greece a deadline of March 16 to show that it can make big spending cuts to bring its deficit down from the EU's highest — 12.7% of economic output, to 8.7% this year.

They said this was essential to ‘remove the risk of jeopardising the proper functioning of economic and monetary union’.

Eurozone nations, which have pledged to bail out Greece if needed, said they would demand new spending cuts, higher value-added and fuel taxes and new taxes on luxury goods including cars, if Greece could not make the deficit reductions it has promised.

Greece now has a month to show that it can make real savings from a freeze on public sector salaries, cuts to bonuses and stipends and promises to reform pensions and health care.

Meanwhile the government was facing opposition at home as customs officials walked off the job yesterday for a three-day strike which will hamper imports and exports.

Finance ministry employees went on strike for four days, including staff at Greece's much-maligned statistics service, accused by the EU of helping cause the crisis by faking the country's economic statistics.