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Athens. Debt-hit Greece heads for another grilling by European peers in Brussels this week over its austerity moves in the wake of a general strike and a recession that is fast turning into a crisis.

Greek Finance Minister George Papaconstantinou has to show his European Union counterparts in two days of meetings that Athens can enforce draconian cuts whilst fighting a recession and facing angry protests on the streets.

Detailed options for European-level financial support to help Greece out of its debt crisis will also be presented to euro zone finance ministers when they meet today and on Tuesday. Reports suggest two main proposals will be on the table.

One involves a series of loans by European partner countries, coordinated by the European Commission, the EU’s executive arm, while the other would see the commission borrow money on markets and extend Greece loans guaranteed by EU states.

An internal commission document said the first option is seen as easier in the short term, but the second is favored in the long-run. However, the latter approach would require the assent of sceptics in Britain and Sweden because the commission acts for all 27 EU member states and not just the 16 that share the euro.

Papaconstantinou’s briefing comes under Greece’s duties to regularly report its finances after the EU imposed “quasi-permanent” supervision last month in reaction to Athens revealing that it had grossly under-reported its budget figures.

The government this month unveiled a wave of state spending cuts and tax hikes worth 4.8 billion euros ($6.6 billion) and hopes to save a total of around 15 billion euros this year, according to Finance Ministry sources.

More cuts are on the way. A new law overhauling the tax system is expected by the end of March and legislation to reform pensions and increase the statutory retirement age will come the following month.

But in a report released ahead of the EU finance ministers’ meetings, Greece said recession could force it to take further deficit-cutting steps.

Uncertainty also stems from protests to the cuts and tax hikes, with joblessness at 10.2 percent, sparking two general strikes and street clashes in past weeks.

Official data on Friday showed the economy shrinking 2.5 percent in the fourth quarter of 2009 compared with the year-earlier period, a slight improvement on a previous estimate.

But the Greek Finance Ministry report said national output in 2010 “will most likely be lower” than its January forecast of a 0.3-percent contraction.

Greece needs more than 20 billion euros by May to avoid defaulting on old debts.

 

Agence France-Presse