European finance chiefs said Greece must rein in its budget deficit on its own as the nation’s fiscal crisis threatens to spread to other countries in the region.
“The Greeks are very much aware of how serious the situation is, and they are very much aware that they will in the end have to solve the situation themselves,” Dutch Finance Minister Wouter Bos told reporters today before a meeting with euro-area counterparts in Brussels. “They have difficult work to do,” Germany’s Wolfgang Schaeuble said.
Greece last week presented its economic plan to push down a budget deficit that’s still more than four times the European Union’s limit of 3 percent of gross domestic product and which has prompted rating companies to cut the nation’s creditworthiness. Finance Minister George Papaconstantinou will brief his counterparts on the budget plan, which includes 10 billion euros ($14.4 billion) in cuts this year.
Papaconstantinou said in an interview on Jan. 14 that overall government debt will “peak” at 120 percent of GDP next year and “start declining afterwards.” He also signaled the need for Greece to provide more-reliable statistics after the EU said earlier this month that the country’s data contained “severe irregularities.”
“The serious reforms made to their statistics will help detect and avoid more problems like this in the future,” Schaeuble told reporters.
Luxembourg’s Jean-Claude Juncker, who is leading today’s meeting, called for “broader economic surveillance” of national economies by the euro-area finance ministers. The European Commission “should not hesitate” to warn governments if they “risk jeopardizing the proper functioning of the economic and monetary union,” Juncker said in a letter to the ministers dated yesterday.
Finance ministers should follow such a warning with “a frank discussion with the member state concerned,” said Juncker, who is set to win a new term as eurogroup head.
The finance chiefs also are debating who will succeed Lucas Papademos as vice president of the European Central Bank after his term expires at the end of May. The most likely appointees are Luxembourg central bank chief Yves Mersch, Portuguese counterpart Vitor Constancio and ECB Banking Supervision Committee Chairman Peter Praet, economists say.