Greece enters new critical phase of judgement on debt

(ATHENS) - Greece enters a new phase of tense uncertainty over its programme to slash overspending on Thursday when European Union and IMF experts leave Athens with their findings of an audit of national finances.

Their visit came as tens of thousands of people took to the streets of Greece on Wednesday to protest the Socialist government's austerity measures.

Greece is at the centre of a crisis threatening cohesion of the eurozone over huge debt and budget deficits, and credit rating downgrades, as well as weak credibility owing to inaccurate data in the past.

It also faces strains in raising new finance on international markets and intense pressure from EU authorities which have offered help in principle but nothing yet in detail.

If the experts say the programme is not enough, a meeting of EU finance ministers could demand even harsher corrective action at a meeting on March 16.

Before that meeting, the EU Financial Affairs Commissioner Olli Rehn is also due to visit Athens.

The mission from the European Commission, the European Central Bank and the International Monetary Fund concluded their work on Wednesday.

They met Finance Minister George Papaconstantinou and Economy Minister Louka Katselli just as the country was hit by a nationwide strike, including a strike by journalists, against austerity measures.

Also late on Wednesday, Standard and Poor's credit rating agency warned that it could downgrade Greek sovereign debt again within a month.

The finance ministry said that the experts were expected to leave Greece later on Thursday.

Since Tuesday they have had sessions with the president of a committee of experts at the finance ministry, George Zanias, officials at the central bank and at the body which manages the national debt.

They also had talks at the labour ministry on the pension system which is a subject of reforms. The government said at the end of last year that in May it might have to borrow to meet pension payments.

The source at the finance ministry said: "We have provided all of the figures requested, there was good cooperation."

Under pressure from financial markets and EU institutions and partners, Greece has promised a programme to cut public spending and crimp public sector pay, to raise taxes and fight tax evasion, and to restructure its economy.

The baseline target is to cut back an annual public deficit by four percentage points of gross domestic product to 8.7 percent this year.

This is widely considered to be an enormous undertaking particularly since credit rating agency Moody's has calculated that Greece will have to use 15.1 percent of its tax revenues this year to meet debt interest payments due.

That is about twice the ratio in other debt-stricken eurozone countries Spain and Portugal.

The last EU summit on February 11 decided to send three-way EU, ECB and IMF missions to Athens regularly under a special arrangement of exceptionally close supervision of Greek public finances.

Greece, which has ruled out making any approach for IMF help but wants support from the EU, holds that the involvement of the IMF gives the EU teams expertise in auditing under such circumstances which they otherwise lack.