ATHENS, Greece – Greece's finance minister held an emergency teleconference with international creditors Monday, hours after pledging to speed up reforms and civil-service staff cuts. Global markets were skeptical about his promises and stocks fell around the world.
Greece's European eurozone partners and international creditors were stepping up the pressure at the start of a crucial week in Europe's nearly two-year debt crisis. Out of patience with the Socialist government's delays on promised reforms, creditors were threatening to cut the country's cash lifeline, which would force Greece to go bankrupt in less than a month.
Despite pledges by Greek Finance Minister Evangelos Venizelos, fears that Athens will default on its mountain of debt ruled the day. Stocks were hammered in the United States and Asia as well as Europe.
Athens is struggling with a deepening recession that is eating away at the impact of its austerity measures while also causing unemployment to spike and public anger to grow.
International debt inspectors started the phone conference with Venizelos late Monday, and the government said the call could last until early Tuesday or even be continued later that day.
"We expect the Greek authorities to explain, in particular, how they intend to close the fiscal gaps in 2011 and 2012 and how they plan to proceed with the structural reforms and privatizations," said Amadeu Altafaj Tardio, a spokesman for the European Commission.
When it became obvious earlier this month that there was a more than euro2 billion ($2.75 billion) shortfall in the 2011 budget, Greece's creditors threatened to withhold the sixth installment of a euro110 billion ($150 billion) rescue package agreed upon in May 2010.
Without that installment, worth euro8 billion ($11 billion), Greece faces defaulting on its debts by mid-October.
A review by officials from the International Monetary Fund, the European Central Bank and the European Commission, collectively known as the 'troika,' was suspended earlier this month amid talk of missed targets.
Ahead of the discussions, Venizelos said the government still seeks to generate euro3 billion ($4.1 billion) more revenue next year than it spends, before counting the cost of interest on existing debts.
Greece's economy is expected to contract about 5.5 percent this year and a further 2.5 percent in 2012, according to new government and IMF estimates.
"The country cannot go forward without the true implementation of major structural reforms," Venizelos said at a conference south of Athens, adding that achieving the 2012 target was vital.
The government still must live up to its commitment to lower the 2011 budget deficit goal to 7.6 percent of gross domestic product.
The Greek government has hurriedly announced an extra two-year property tax -- payable through electricity bills to ensure its collection -- to compensate for the shortfall.
But the news was greeted with a fierce outcry from a public already reeling from salary cuts and the recession. State electricity company unionists also threatened to refuse to collect the taxes.
Yiannis Panagopoulos, head of Greece's largest trade union, GSEE, said further revenue-boosting levies would be "unfair and imbalanced."
"Our country has recently been undergoing a weekend nightmare: every weekend there is the threat of bankruptcy, whispers of a coming bankruptcy, we hear again and again that everything is about to collapse," he said. "What our creditors are asking of the country is unthinkable ... a country is its people, and above all it is they that must be saved."
A Communist labor union is holding a protest against the tax outside parliament Wednesday.
Venizelos said Sunday night that the backlash from ordinary Greeks has led to skepticism among Greece's creditors about whether the government would manage to raise the projected revenue.
While technical staff from the troika have been back in Athens for about a week, trying to figure out whether the new measures will be enough to meet the budget targets, senior debt inspectors have stayed away until progress is made.
IMF representative Bob Traa urged the government to speed up structural reforms and avoid further emergency taxes, arguing that Athens should give up its "taboo" of firing public servants.
"I have compared Greece to a Mercedes that can go 120 kph but is only going 40 because it has so much sludge in the engine," Traa told the conference.
He said Greece needed to speed up its reforms in tax collection and reduce the size of the overmanned public sector. Greece has plans to slash 150,000 public sector positions by 2015.
"If you can do it (staff cuts) up front, you get over it much more quickly," Traa told the AP. "Our experience is that ... if you do things gradually, that may induce the public getting very tired (of austerity measures."