Greek crisis: Cabinet meets to discuss debt measures

The government said Mr Papandreou wanted to ensure commitments were fulfilled

Greek Prime Minister George Papandreou has chaired cabinet crisis talks, a day after cancelling a trip to the US amid growing fears over the debt crisis.

The talks focused on new austerity measures to enable Greece to secure the country’s next bailout loan.

Greek newspaper To Vima said lenders had set further conditions including the dismissal of another 20,000 state employees before releasing the loan.

After the cabinet meeting, the finance minister vowed to take tough decisions.

‘More likely’ default

Mr Papandreou had planned to attend the UN General Assembly and IMF meetings.

Greek media said he took the decision to return to Athens after consultations with Finance Minister Evangelos Venizelos.

The decision comes a day after eurozone ministers delayed a decision on releasing more money to Greece.

Eurozone leaders will now decide in October whether to release the next 8bn euros ($11bn; £7bn).

To Vima published a document listing 15 new measures allegedly demanded by the troika of lenders – the European Union (EU), the European Central Bank (ECB) and the International Monetary Fund (IMF).

The newspapers said this included redundancies among civil servants – bringing the total to 100,000 – and a cut in pensions and salaries.

The Greek government is expected to run out of cash to pay for public services by mid-October if it does not receive further loans.

Euro obligation

German Finance Minister Wolfgang Schaeuble has warned that no money will be forthcoming if Greece does not stick to planned cuts in its borrowing.

“Membership in a monetary union is an opportunity, but also a heavy burden,” he told German Sunday newspaper Bild am Sonntag.

“The Greeks must decide whether they want to bear this burden.”

Eurozone leaders decided on a second bailout of 109bn euros for Greece at a Brussels meeting in July. It is still receiving the initial 110bn-euro bailout, agreed in May last year, in tranches.

October’s loan decision will be based on assessments by the three lenders.

There are concerns they may rule that Greece has fallen behind on its spending cuts targets – the government was forced to introduce a property tax amid fears prompted by the recession that it would miss its target of capping its budget to 7.6% of GDP.

Mr Venizelos said the Greek cabinet’s meeting on Sunday had outlined the steps on which he was to brief the three lenders on during a teleconference on Monday.

He did not give details, but told reporters: “We must fully meet 2011 and 2012 fiscal targets.”

Demands that Greece accelerate its austerity plans, and divisions among governments and policymakers over support for indebted eurozone members, have sparked turmoil in the financial markets.

But the head of the Eurogroup of ministers, Jean-Claude Juncker, said Greece was making “significant progress” and welcomed Athens’ commitment to the austerity programme.

German Chancellor Angela Merkel is facing dissent within her governing coalition over whether Greece should be made to default on its debts.

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