Officials working to leverage the region’s rescue fund as pressure mounts to staunch a sovereign debt crisis.
Greece has said that it will miss key targets set by the European Union and the International Monetary Fund for reducing its budget deficit for both this year and the next, despite a further round of austerity measures.
The EU and the IMF imposed the targets as part of an emergency bailout to save the debt-ridden eurozone member state from potential bankruptcy and a loans default which analysts say could pitch the world into a new economic crisis.
Greece’s deficit this year is expected to reach 8.5 per cent of gross domestic product, or $25.2bn; higher than the targeted 7.8 per cent of GDP, or $23.1bn, the finance ministry said on Sunday.
For 2012, the deficit is projected to shrink to $19.8bn, or 6.8 percent of GDP; still higher than the EU-IMF target of 6.5 per cent.
Analysts fear any default on Greek debt could pitch the fragile global economy into a fresh recession.
Eurozone countries who share the debt-challenged euro currency will be meeting in Luxembourg as International auditors spent the weekend trying to obtain the most accurate picture of Greece’s finances and forecasts, after protests including staff occupations of ministries slowed the resumption of negotiations.
The Greek failure to reach the deficit target is linked to a bailout package that Greece needs to avoid running out of cash. The government says it needs the loans to pay salary and other bills this month.
Athens is labouring under a crushing 350 billion euros or more of debt, with its stripped-bare economy already on its knees.
Earlier, the cabinet had approved a measure to begin reducing the number of state workers, a contentious part of an austerity plan aimed at freeing up the latest installment of EU and IMF loans.
The plan creates a “labour reserve”, allowing state workers to be placed on partial pay and be dismissed a year after.
The government has said it will put 30,000 workers in the reserve by the end of this year.
The finance ministry said in a statement after Sunday’s cabinet meeting that the 2012 draft budget, including details of redundancies, had been approved and would be submitted to parliament on Monday.
The move is the most contentious part of the EU-IMF reform package.
Without the release of the latest $14bn bailout payment, Greece could run out of money to pay state wage bills within weeks.
There are fears another debt default could wreck the balance sheets of European banks, damage the prospects of the euro currency and devastate the global economy’s fragile recovery.
European officials are scrambling to avert the crisis amid calls for Greece to abandon the euro.
A senior member of the ruling coalition in Germany, Europe’s paymaster, said it may be necessary for Greece to get out of the eurozone, a prospect European governments officially reject as beyond consideration.
Strikes and demonstrations
Al Jazeera speaks to Vanessa Rossi, economic adviser to Oxford Analytica
The latest round of austerity measures are deeply unpopular in Greece, and public sector unions hope that strikes and demonstrations can wreck the Socialist government’s resolve to enact them.
Workers to be laid off make up a fifth of the Greek workforce and are presently virtually guaranteed jobs for life under a constitution that bans firing government employees in almost all circumstances.
The government has yet to announce how the programme would work, including details such as whether it would be used to push out younger workers, or only to accelerate the retirement of workers already reaching pension age.
Negotiators from the IMF, EU and the European Central Bank (ECB), known as the troika, have returned to Athens, the Greek capital, after walking out of talks a month ago, and have met Greek officials for the past four days.
The officials 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.
Olli Rehn, the EU economic and monetary affairs commissioner, is expected to brief eurozone finance ministers in Luxembourg on Monday.