Greece in limbo after EU conference call

Evangelos Venizelos, the Greek finance minister, and the deputy prime minister took part in the conference call, which centred around the next steps the government must take in order to win delivery of the next tranche of bail-out cash, some €8 billion. Without these funds, the country is expected to run out of money by mid-October.

The finance ministry put out a statement following the phone call saying that the discussion was "productive and substantive" and that on Tuesday morning, technical experts in Athens will "further elaborate on some data."

A second conference call is to take place on Tuesday evening.

Greek media reports that the troika representatives are demanding a series of 15 new measures to be immediately implemented. The moves include cuts in civil servant pay, closure of some 30 unprofitable public enterprises, lower healthcare spending, limits on pensions, 20,000 civil servant lay-offs and corralling some 150,000 state workers into a "labour reserve" in which they will receive lower wages before being fired.

If the government does not accept the conditions, it will not receive the bail-out cash.

For its part, the European Commission on Monday said it is not asking Greece to accept any fresh austerity, but merely to adhere to what has already been agreed.

Meanwhile, the Greek government is on a knife edge as civil unrest threatens to once again sweep across the country. And ministers admit that popular resistance to austerity has been successful in helping to throw sand in the wheels of restructuring.

On Monday, public sector workers agreed to hold a national strike on 6 October. Discussions are underway to extend the work-stoppage to a general strike in all sectors.

Prime Minister George Papandreou is considering holding a referendum on whether to continue with austerity or to exit the euro, according to a report in conservative Greek daily Kathimerini.

According to the paper, Papandreou believes that a successful vote would give the government a fresh mandate to push through what the troika demands.

A loss in the referendum however would likely result in snap elections at an awkward time. But some cabinet ministers believe the government should move directly to elections in any case.

Legislation putting forward the referendum question is to be discussed in the next few days.

In separate developments, agency Standard & Poor’s on Monday cut Italy’s sovereign debt rating from A to A+ and kept its outlook on negative. It justified the move by saying the country’s growth prospects are gloomy and that the latest austerity measures announced by the government are unlikely to improve matters.

"We believe the reduced pace of Italy's economic activity to date will make the government's revised fiscal targets difficult to achieve," the agency said.