The European Commission said Monday it will demand tougher measures such as new taxes and cutbacks if Greece doesn't make progress getting its ballooning deficit under control.
Greece's budget crisis and worries that it won't be able to pay back debt have shaken the European Union and its shared currency, the euro, which has slid in value recently. It has also intensified speculation that other EU nations might have to bail Greece out if it risks default.
Greek and European officials say that they are confident that the country will manage to curb its budget gap and that a financial rescue won't be necessary.
EU Economy Commissioner Joaquin Almunia said Monday that the EU executive believed Greece's "ambitious" targets to fix its budget crisis "are achievable although surrounded by risks."
If those risks materialize, he said the EU would step in and demand new measures — such as new taxes or cutbacks — to bring Greece's spending in line and moves to make the economy more competitive, such as curbing wage levels that are well above productivity levels.
Greece will soon start publishing monthly reports on its revenue and outgoings to show markets — and other EU governments — how it is trying to balance the books.
Greece also will from mid-March report regularly to the European Commission about what it is doing to put promised reforms into practice.
That includes wider action to reshape the Greek economy, including tackling a vast black market by bringing workers into the tax system and reforming public sector pensions and health care.
"Every time we will see or perceive slippages ... we will ask for additional measures to correct these slippages," Almunia said. "Never before have we established so detailed and tough a system of surveillance, monitoring and reporting."
The Commission will publish details on Wednesday, asking EU finance ministers to endorse its program at a Feb. 15-16 meeting.
German Foreign Minister Guido Westerwelle also will meet Wednesday with Greek Prime Minister George Papandreou in Athens to discuss the financial and economic crisis. Westerwelle told a Greek newspaper on Sunday that Greece had the "full support" of Germany and other EU nations.
The Greek government last month drafted an austerity plan that promised savings from a crackdown on tax and social security cheats, new alcohol and tobacco taxes and a freeze on public sector recruitment.
It is aiming to bring its deficit down from an estimated 12.7 percent last year to 2 percent by 2013.
That broadly won the backing of markets. Credit rating agency Moody's said the budget was relatively well-designed — but calculated that around half of the savings are one-off changes as the government withdraws extra spending promised ahead of the October 2009 election.
Both markets and the EU worry that Greece will not be able to implement the program, which could trigger social unrest if the government has to make harsher cuts to social welfare and health care.
Farmers blocked major roads earlier this week to demand financial help to overcome low food prices. The government has said the debt crisis makes it impossible to give them any more money.
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