Adding to Greece's economic woes, an EU source said today (13 January) that the European Commission was likely to take legal steps against Athens over its unreliable reporting of its public debt and budget deficit in October.
EU legal steps
The European Union, investors and trade unions piled pressure on Greece as it struggled to raise funds amid concerns about its huge debt burden and deficit.
"There will probably be another infringement procedure [...] because providing timely and reliable statistics is an obligation under EU law and they have failed in their obligation," the EU source said.
Olli Rehn, the European Union's economic and monetary affairs commissioner-designate, told an approval hearing in the European Parliament on Monday that Greece's fiscal woes were very serious but did not yet threaten the euro zone (EurActiv 12/01/10).
Tumbling debt rating
Greece paid a high premium to borrow 1.6 billion euros ($2.34 bln) from financial markets, while bank shares fell the most in a month and the cost of insuring its bonds rose, hit by an EU document that cast doubt on its reporting of statistics.
The country has been pounded by successive downgrades of its debt rating, and Tuesday's auction was the first test of how easy it will be for Athens to continue to fund its deficit and debt without international aid.
The European Commission said in a report on Monday that past Greek deficit and debt figures could be revised further as the current institutional setup for Greek statistics was seen as ineffective and prone to political interference.
The new socialist government is also under pressure domestically, and the civil servants' union announced a one-day strike on 10 February to protest against any austerity measures.
The socialists, who won the October elections promising to tax the rich and help the poor, will present a plan to the EU by early next week on how they plan to cut the deficit from 12.7% of GDP in 2009 to under 3% in three years.
Labour Minister Andreas Loverdos said cash is so low in parts of his ministry that he would run out of money to pay unemployment benefits this week.
(EurActiv with Reuters.)