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Juncker urges Greece to take measures -paper

Published 03/22/2009, 09:02 AM
Updated 03/22/2009, 09:08 AM

ATHENS, March 22 (Reuters) - Greece needs to take additional measures to fix its fiscal problems and weather the global crisis, the chairman of euro zone finance ministers said in an interview published on Sunday.

Greece, with a budget deficit breaching the European Union's 3 percent of GDP cap in 2008, is struggling to contain its fiscal shortfall as its crisis-hit economy is seen growing by only 0.2 percent this year after years of robust growth.

"We urge Greece to take measures," Jean-Claude Juncker told Eleftherotypia newspaper.

Greece got out of EU supervision in 2007, after bringing its budget gap below the limit. It sees a deficit above the 3 percent ceiling in 2009, while its public debt is expected to rise to 96.3 percent of GDP.

"The fact that your country has been twice in five years under supervision, shows clearly that Greece needs additional measures," Juncker said.

The fragile conservative government, clinging to a one-seat parliamentary majority, has launched a 28-billion euro support plan to boost banks' liquidity during the global crisis.

Last week Greece also announced a series of one-off tax hikes and caps on public sector wages policy to deal with its deteriorating finances, sparking the anger of unions which said the government's measures were only burdening the poor.

Juncker said on Friday the euro zone would be able to respond immediately if one of its members risked a default, but told Eleftherotypia he did not believe Greece would go bankrupt.

"I know that Greece has huge problems, but I believe it won't reach bankruptcy," Juncker said.

On Friday, a senior German lawmaker told Reuters in an interview that euro zone states had agreed a rescue plan to prevent fragile financially members of the currency bloc going bankrupt. He cited Greece and Ireland as the top candidates for aid.

The comments sparked fierce denials from European leaders, including Greek Prime Minister Costas Karamanlis, that such a rescue plan existed, while Greece's Finance Ministry said the country did not need any help to stave off a possible default.

(Reporting by Renee Maltezou; editing by John Stonestreet)

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