BRUSSELS: Eurozone finance minsters will seek agreement Monday on unlocking vital loan aid for Greece, after Athens warned it will miss its budget deficit targets both this year and next.
The 17 countries that share the debt-challenged euro currency will meet in Luxembourg from 1500 GMT, with their priority to reach an understanding ON whether Greece should receive an eight-billion-euro tranche of loans, blocked by the IMF for the past month.
International auditors spent the weekend trying to obtain the most accurate, up-to-date picture of Greece's finances and forecasts, after protests, including staff occupations of ministries, meant a slow resumption of negotiations last week.
The Athens government did nothing to improve the mood of investors when it announced Sunday that the national budget deficit should drop to 8.5 percent of GDP in 2011 from 10.5 percent last year, short of a 7.4-percent target initially fixed in June.
The figure was set out in a draft 2012 budget adopted during an extraordinary cabinet meeting in Athens.
In 2012, Greece expects a further reduction of public deficits, setting the target to 6.8 percent of gross domestic product, instead of the 6.5 percent forecast in June, due to a deeper recession.
Asian markets were the first up to react to the news, and the movement was swiftly downwards.
Hong Kong stocks plunged more than three percent in early trade Monday on new fears about the eurozone debt crisis
European Union economic and monetary affairs commissioner Olli Rehn will give the Eurozone finance ministers assembled in Luxembourg the inside track on what the Washington-based IMF wants to do, as a looming recession risks turning Greece's crisis into global catastrophe.
There remains the spectre of imminent default, as anticipated by markets treating Greek sovereign bonds as monopoly bets.
The expectation is that the European Central Bank, soon under new Italian management, will step back in.
Athens is labouring under a crushing 350 billion euros or more of debts, with its stripped-bare economy already on its knees, and the government says it needs the loans to pay salary and other bills this month.
The United States and other major economies are showing growing signs of concern that Europe is too divided to solve the Greek problem or deal with problems in the much bigger Italian economy, and adequately re-capitalise banks that lose heavily in the event of default.
France is one of the most heavily exposed.
Outside Europe, the fear is that a ricochet effect could charge through global financial markets already on a downer as data increasingly points towards renewed recession.
Many want the 440-billion-euro ($590 billion) European Financial Stability Facility's (EFSF) legal status changed to that of a bank, so it could "leverage" much more firepower.
In other words, based on different rules governing how much is needed in terms of reserves, borrow vast sums to ensure worries over bigger eurozone nations evaporate.
Global pressure is on to resolve the problems before G20 leaders meet in Cannes on November 3-4.
US Treasury Secretary Timothy Geithner has already urged German Finance Minister Wolfgang Schaeuble to put more of Berlin's financial firepower at the eurozone's disposal if things worsen.
But Schaeuble said at the weekend that the 211-billion-euro limit set for its exposure will not rise.
The first hill on a difficult horizon is final ratification of an agreement reached by eurozone leaders in July giving the EFSF the scope to intervene when sovereign governments get into cashflow difficulties.
As of Friday, 14 of the 17 eurozone countries had passed legislation the EU wants to be able to trumpet at a summit in Brussels on October 17-18.
The EU-IMF auditors returned to Athens on Thursday, four weeks after they abruptly left disappointed at Greece's lack of progress in implementing promised structural reform measures.
They pressed the goverment to underdake further austerity measures to reduce expenses and increase revenues.
Athens unveiled late on Sunday a plan to shrink its bulging civil service by 30,000 people by the end of the year.
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