EU pushes Greece for tougher fiscal measures

* EU mission pushes Greece for more spending cuts

* Finmin says must exit supervision quickly

ATHENS, Jan 8 (Reuters) - An EU inspection team pushed Greece to adopt tougher measures to cut crippling deficits during a 3-day visit to Athens ending on Friday, officials said.

Greece’s new socialist government is struggling to balance tough fiscal steps needed to restore market confidence in the euro zone’s weakest link with pre-election promises to help the poor, as labour action looms. “EU officials are asking for spending cuts as much as possible,” Finance Minister George Papaconstantinou told Greek TV. “We are in the eye of the storm. A country that borrows 50-60 billion euros a year has to think of the markets.”

Elected on Oct 4, Greece’s socialist government revealed its predecessor had under-reported fiscal problems and promised to cut the budget deficit to below the EU limit of 3 percent of gross domestic product (GDP) by 2012, from 12.7 percent in 2009.

An EU inspection team spent three days in Athens going over a proposed Greek stability plan, which is expected to be submitted to Brussels around Jan. 20. Greek officials said the mission had asked for a more concrete timetable and numbers.

Greece’s economic woes have prompted the reaction from EU peers, concerned about the euro. On Thursday, Spanish Prime Minister Jose Luis Rodriguez Zapatero, whose country holds the EU presidency, said Greece’s crisis would test the bloc’s ability to coordinate policy, but added: “Each country has a responsibility for its own budget.”


Forced to borrow to plug the big budget hole, Greece is set to become the euro zone’s most indebted member this year. Fiscal woes have triggered rating downgrades and pushed the cost of borrowing higher.

“The large deficit and huge debt which we have is a load on the economy and citizens. It hinders growth,” Papaconstantinou said, adding that it was Greece’s choice to shorten the timeframe for cutting the deficit to 3 years from 4.

“It was our own decision, a political one,” he said. “The country should get out of the (EU’s) disciplinary procedure as soon as possible.”

Greek officials said the team of EU officials had focused on Greece’s twin deficits -- budget and current account.

They said EU inspectors had asked for a cut in the pensions bill and the minister told an Italian newspaper on Friday the government would present a pension reform bill to parliament in April, instead of this summer as originally announced.

Pension fund shortfalls are also straining Greece’s public finances but Papaconstantinou said the government was not considering raising the retirement age.

Unions have planned strikes against the fiscal measures in early February but many Greeks say they are willing to suffer pain provided it is spread out evenly.

“We are under great pressure from the EU. I’m sceptical about how effective the measures will be but we’ll accept them if they are for the best of the country, provided they do not hurt the poor,” said accountant Trifonas Tzavaras, 36.

Papaconstantinou said he was not happy with Greece’s image abroad, the result of lost credibility for which he blamed the previous conservative government.

“It is easy to lose credibility and difficult to gain it back,” he said. “We feel pretty bad for the image Greece has abroad. At EU finance minister meetings I feel uncomfortable having to defend the self-evident, which is that a country is telling the truth.” (Additional reporting by Renee Maltezou; Writing by Dina Kyriakidou; Editing by Stephen Nisbet)