The new government plan aims to slash the country's runaway public
deficit by a whopping nine points to bring it down to just one percent of Gross Domestic Product by 2015. The EU deficit ceiling is three percent.Greece is under pressure to overhaul its economy with sweeping cuts in its chronically inefficient public sector but a draconian austerity drive enforced for the past year has so far fallen short of the expected results.Painful cuts to wages and pensions, and a spending clampdown on state entreprises in 2010 succeeded in bringing down the budget deficit by more than five percentage points, substantial by any standards.
But the finance ministry has admitted that because of a deeper-than-expected recession, the 2010 deficit will still be higher than the official estimate of 9.4 percent of GDP.
EU data agency Eurostat will release the final figure on April 26 but Greek media are already bracing for a deficit of more than 10 percent.
The slippage is expected to bring a new round of austerity measures that have already drawn criticism from government lawmakers in parliament while the cuts so far imposed have caused sometimes violent protests on the streets.
The economic pressures facing the country have now also caused divisions among the ruling socialists.
Vasso Papandreou, a senior figure inside the socialist party, warned that government policies were pushing the country into an ever-deeper hole in comments directed at Finance Minister George Papaconstantinou on Tuesday.
"This situation leads nowhere," said Papandreou, who heads the parliamentary committee that examines Greek economic policy.
"We are constantly taking measures and we are entering a vicious circle," she added.
Papandreou called for the government to seek a restructuring of its huge debt of over 300 billion euros ($426 billion).
EU, IMF and European Central Bank officials are examining a tough new Greek austerity budget, a government source said Wednesday as analysts bet Athens will have to restructure its soaring debt.
Auditors from the European Union, the International Monetary Fund and the European Central Bank, which last year bailed out Greece from near-bankruptcy, are to meet the finance minister to discuss the blueprint.
"The talks are expected to focus on the three-year budget draft," the government source told AFP on condition of anonymity.
The visit was not part of regular quarterly reviews to check the country's progress on the commitments Athens made in return for last year's
Such a move has been consistently ruled out in Greece for fear of destroying the country's fragile credibility with markets and placing major strain on the nation's banks.
The IMF has also said it supports the government's decision against restructuring and the European Union again ruled out the prospect on Wednesday.
"We are ruling out the scenario to which you are referring," said Amadeu Altafaj, spokesman for EU economic affairs commissioner Olli Rehn, responding to a journalist's question on reports about a restructuring.
"We are not aware of any such discussions," he said.
But several analysts believe that despite the government's persistent denials, Greece will be forced to take this step before long.
"There is a 60-percent chance that Greece will restructure its debt," said Ciaran O'Hagan, head of interest rates research at Societe Generale in Paris.
A planned Greek borrowing sortie in 2011 has been postponed amid murderous rates -- nearly 16 percent for two-year loans and over 12 percent for 10-year bonds, by any measure, unsustainable.
Athens has also stopped issuing 3- or 6-month treasury bills, the limit of its exposure following its escape from insolvency last year.
"They can no longer finance themselves at such rates," said Christian Parisot, an economist at French investment house Aurel.
