Greece yesterday announced €2 billion in new budget cuts demanded by the EU and the IMF for its rescue package, as Germany warned a Greek ''orderly default'' could not be ruled out.
Greek Finance Minister Evangelos Venizelos said a shortfall of €2 billion had to be covered for the country to be able to meet its obligations while unveiling a special tax on property.
The minister told Greek television this "new national effort" was crucial given the unfavourable perception of Greece abroad, with renewed rumours of a debt default or Greece's possible exit from the euro zone.
EU economy commissioner Olli Rehn said a team of experts would head to Athens in the next few days to work an accord on a new tranche of Greece's 2010 rescue package.
"Once Greece meets the conditions, I expect the review by the troika could be concluded by the end of September," he said, referring to the European Commission, the European Central Bank and International Monetary Fund.
The troika of lenders had left Greece earlier this month because of the government's lack of progress on deficit reduction and meeting conditions for the next tranche of its 2010 bailout plan.
The key measure announced yesterday by Greece, the propety tax, will vary according to the use, size and the location of the property, with ;an average rate of €4 per square metre," and will be implemented immediately, Venizelos said.
The minister also announced that elected Greek officials "from the head of state to the mayors" would go without a month's salary and that a meeting was planned with representatives of shipowners to see how they could contribute to straightening out the country's finances.
According to media reports yesterday, German Finance Minister Wolfgang Schaeuble doubts that Greece can avoid bankruptcy and is preparing for a scenario where the debt-stricken nation becomes insolvent.
German finance ministry officials are contemplating a scenario where the country stays in the euro zone and another where it re-introduces its former currency, the drachma, Spiegel magazine reported.
In July, euro zone leaders agreed in principle on a €159 billion second rescue package for Greece, but the details have not been finalised. EU finance ministers met this weekend in Poland and discussed the situation in Greece and an emergency meeting of the IMF on the issue is set for Wednesday.
Greek Prime Minister George Papandreou said yesterday that Greece must defend itself "like being in a state of war" to obtain the second bail-out, "despite the ill will" of some Europeans.
