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Greece promises quick deficit reduction

January 06, 2010 | "Associated Press"

ATHENS, Greece -- Greek Prime Minister George Papandreou on Wednesday again promised his country would succeed in rapidly cutting its budget deficit, following a fresh warning over the country's massive debts by a top official at the European Central Bank.

The government on Tuesday vowed to conform with European Union deficit limits in just three years, instead of four as earlier promised.

Papandreou said that "2010 will be a year of major change ... We will continue on this course with a feeling of certainty. We know where we are going and the necessary changes made will be made."

His assurances Wednesday were made as EU finance officials were due in the Greek capital to review Greece's fiscal plans. The officials from the European Commission and European Central Bank and due to review preparations for Greece's fiscal stability plan must be submitted to the EU by the end of the month.

Juergen Stark, a member of the European Central Bank's six-member executive council, cautioned that, according to eurozone treaties, Greece has no right to claim fiscal support from other member states.

"Markets are deluding themselves if they think that member states will open their wallets to save Greece," he was quotes as saying by the Italian daily Il Sole 24 Ore.

Stark said Greece's debt problems were of its own making, not due to the global financial crisis.

Greek officials say they are not asking for outside help.

"We are acting appropriately as the Greek government and we would not as for any other European government to provide support," a senior government official told The Associated Press. He asked not to be identified, as he is not directly involved in the government's fiscal recovery plan.

The country's new Socialist government is promising to reduce the budget deficit, projected at 12.7 percent of gross domestic product for 2009, to the EU limit of 3 percent by the end of 2012. It had earlier promised to reach that target by the end of 2013.

The national debt is expected to reach a staggering euro300 billion ($433 billion) in 2009.

Last month, three international ratings agencies downgraded Greece's credit rating, prompting the government promises to announce more aggressive public spending cuts.

By DEREK GATOPOULOS

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