More details anticipated on Greek bail-out

BRUSSELS - EU economy commissioner Olli Rehn is to travel to Greece on Monday (1 March), fueling expectations that further Greek austerity measures in exchange for eurozone financial support could be announced as soon as this week.

EU finance ministers are set to take a decision on the need for further Greek action on 16 March, although officials caution the date is too distant.

A recent EU mission to Athens concluded the administration's current programme of spending cuts and revenue raising measures were not enough to reassure financial markets.

Mr Rehn is set to meet a line-up of senior Greek officials during his visit, including finance minister George Papaconstantinou, economy minister Louka Katseli and labour minister Andreas Loverdos.

"If more measures are to be taken, they will be announced soon," Mr Katseli told state television over the weekend.

Greek news reports suggested a two-percent hike in sales tax, additional benefit cuts for civil servants and possible limits on Christmas and Easter allowances, known in Greece as the "13th wage", roughly amounting to €4 billion, were in the offing.

The head of the eurozone finance ministers, Luxembourgish Prime Minister Jean-Claude Juncker, continued the tough rhetoric on Sunday, saying: "Greece must step up its efforts to limit its public deficit."

Greece won EU backing for its austerity package last month, but since then, officials and analysts have questioned whether the measures will successful knock four percent off the country's current budget deficit of 12.7 percent by the end of 2010, as agreed.

Bail-out preparations

Anticipation of additional Greek austerity measures has also added to speculation that EU governments could shortly announce details of a financial aid package for Greece.

Greek media reports on Saturday suggested Berlin was planning to support future Greek bond issues through its state lender, KfW, with further assistance from France's Caisse des Depots. Cited bail-out figures have ranged from €20-30 billion.

French Finance Minister Christine Lagarde confirmed that discussions over rescue options were taking place and could involve "either private partners, or public partners - or both".

"I have no doubt that Greece will succeed in refinancing itself through ways that we are exploring at the moment," she told national radio on Sunday.

The timing of any agreement is still under intense negotiation however, with a meeting in Berlin this Friday between Greek Prime Minister George Papandreou and German Chancellor Angela Merkel being one possible date.