Greece told to act quickly to restore public finances

Commission puts on the pressure.

The European Commission yesterday (9 December) called for “more measures” from the Greek government to restore the country’s public finances.

It made the call following heavy selling of Greek government bonds in the financial markets and a sharp dip on the Athens stock market. Traders reacted to the decision by Fitch, a credit-rating agency, on Tuesday (8 December) to cut Greece’s rating to BBB+, the lowest in the eurozone. Standard & Poor’s, another rating agency warned on Monday that it too is considering cutting Greece’s rating.

Substantial challenges

Joaquín Almunia, the European commissioner for economic and monetary affairs, said yesterday that Greece faces “very substantial economic and fiscal challenges”. He said that the Commission was ready to assist the Greek government in drawing up a “comprehensive consolidation and reform programme”. Jean-Claude Trichet, the president of the European Central Bank, said on Monday that the Greek government would have to take “important and courageous decisions” to restore its public finances.

Massive deficit

The Greek government expects its deficit to reach 12.7% of gross domestic product this year. Its draft 2010 budget, presented on 20 November, would reduce the deficit next year to 9.1%.

Greece’s Finance Minister Giorgos Papaconstantinou will present a deficit-reduction plan to the finance ministers of the eurozone next month.