ce faced down pressure for deeper budget cuts at yesterday’s euro zone talks and warned that last week’s support pledge by European leaders may not suffice to stop the debt market squeeze on governments in the region.
Greece last Thursday became the first country in 11 years of European monetary union to require such a pledge after mounting concern about its ability to service a bloated debt sparked a market frenzy that drove bond yields up and the euro down.
Greek finance minister George Papaconstantinou defended his government’s plans to slash the public deficit from 12.7 per cent of GDP to less than three per cent by 2012, starting with a four-point cut in 2010.
“We’re trying to change the course of the Titanic, it cannot be done in a day,” Papaconstantinou said as he headed into talks with other eurozone finance ministers in Brussels. “If additional fiscal measures are needed, we will take them. Today it is Greece, tomorrow it can be another country. Any European country can be prey to speculative forces.”
Greece faces some major hurdles soon, with two lots of more than €8bn (£6.9bn) of government bonds to refinance in April and in May.
Markets had hoped at a point last week that the ministers meeting in Brussels would flesh out the political pledges from leaders to discuss actual financial aid, but sources said that the focus would remain on getting Greece to do its part.
Papaconstantinou said that urging Greece to do more right now and before it reports back on progress in March was too much to ask, and suggested ministers should try to develop on the pledges leaders made last week.
“If we announce new (Greek fiscal) measures today, will that stop markets attacking Greece?” he said. “My guess is what will stop markets attacking Greece is a further, more explicit message that makes operational what has been decided last Thursday at the European Council (summit).”