Eurogroup Meet over EFSF, Greece as Default Fears Rise

Greece has been hit by a wave of strikes in protest against tough government measures, including salary freezes and tax increases. Photo by EPA/BGNES

Finance ministers from the seventeen countries sharing the euro meet in Luxembourg on Monday to discuss ways to leverage their EFSF bailout fund and put pressure on Greece to implement agreed structural reforms.

The meeting comes a day after Athens acknowledged it would miss fiscal targets set as conditions for continued emergency funding this year from the European Union and International Monetary Fund.

The Greek cabinet announced late Sunday that it adopted a draft budget for 2012, but the debt-ridden nation will miss key deficit targets for this year and next.

Greece said on Sunday that the budget deficit this year would be 8.5% of gross domestic product, missing a 7.6% target agreed in the bailout that saved it from bankruptcy. It would also miss next year's deficit target in terms of percentage of GDP -- 6.8% instead of 6.5 -- but would meet it in nominal terms.

The Greek cabinet said in a statement that the main reason it would miss the deficit target is due to a deeper-than-expected recession.

Without this emergency injection, Greece is widely expected to run out of money later this month and could default.

The troika is in Athens again this week and is supposed to make a final decision on the next bailout tranche by mid-October.

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