EU rescue meeting to try and help Greece

Pressure mounted on Greece to take even tougher action to contain its debt crisis ahead of a meeting of EU finance ministers Monday to decide how to help the stricken nation. European Central Bank (ECB) president Jean-Claude Trichet castigated the Greek government for its accounting and said other European nations would strictly monitor the recovery plan put in place by the socialist government in Athens. The ECB also wants finance ministers to demand greater budget cuts than those already offered by Greece, whose public deficit has hit 12.7 percent of gross domestic product and debt of about 300 billion euros is now 113 percent of GDP. International share and currency markets nervously waited for a meeting of finance ministers from the 16 countries which use the euro currency on Monday, followed by a full meeting of the 27 EU members on Tuesday, for signs of what kind of rescue would be arranged.

Doubts about Greece's willingness to curtail its debt have increased the cost of borrowing for the country and hit the value of the euro.

Trichet said Greece must strengthen its auditing and that the past use of unverified figures "should not have been tolerated."

"Greece must strengthen the verification of its figures," Trichet told French radio late Sunday. Producing badly checked statistics "should not have been tolerated and is intolerable."

The conservative government which was ousted in October after losing an election has been widely criticised for its figures.

Trichet said he was satisfied by Greek government undertakings to sort its finances out. "They are serious," he declared.

"I'm waiting for a Greek recovery plan to be put into action under the surveillance of other European countries," he said when asked about the finance ministers' meeting.

The German newspaper Handelsblatt said it had a document to be discussed at the finance ministers' meeting in which the ECB calls for bigger budget cuts, increased Value Added Tax for consumers and an even higher tax on luxury goods and energy.

The daily said many ministers oppose the measures proposed.

The ECB said the extra cuts would be the only way for Greece to meet its promise to reduce its public deficit to 8.7 percent this year. The government has said that by 2012 it will bring the deficit below three percent -- the limit for eurozone members.

At a special summit on Thursday, the European Union expressed support for Greece's efforts to rein in its budget deficit and total debt but stopped short of spelling out what it would do exactly to help.

The finance ministers are to formally agree the modalities of aid -- through bilateral loans or guarantees, diplomats have said. France and Germany have led the operation to put standby facilities in place.

The Greek government's spending cuts and campaign against waste and corruption have sparked strikes and protests but Prime Minister George Papandreou's administration won a boost from a new poll which said 65 percent of the public back the austerity measures.

The survey of 1,000 people, carried out by Alco group for To Thema weekly magazine, said 65 percent agreed that the spending cuts were necessary while 60.7 percent felt Papandreou's policy was fair.

Some 51.3 percent criticised the government for not acting sooner and 41.1 percent thought the measures did not go far enough, but 60 percent opposed plans to raise the retirement age -- a key proposal by Papandreou.

Fears have been expressed that the debt contagion could spread to other European nations with high deficits, particularly Spain and Portugal.

Luxembourg Prime Minister Jean-Claude Juncker, head of the finance ministers from euro nations, told the German daily Sueddeutsche Zeitung that the group would monitor "much more intensively and severely" the performance of its members.
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