MercoPress. South Atlantic News Agency

Greece hangs from the cliff while EU leaders can’t agree on rescue or default

Finance Minister Evangelos Venizelos preparing for the exam of his life

Greece’s ability to avoid default hangs in the balance this week as international monitors get set to assess whether Prime Minister George Papandreou can meet the conditions of rescue loans.

European Union and International Monetary Fund inspectors hold a teleconference Monday with Finance Minister Evangelos Venizelos, to judge whether the government is eligible for its next aid payment due next month and on track for a second rescue package approved by EU leaders July 21.

Greece is rushing to meet demands amid doubts from partners it is doing enough to receive a sixth tranche of loans to prevent default. As Papandreou fights investor doubts and domestic protests, European leaders are squabbling over the terms of the July agreement and the prospect that they will be forced to channel more money to keep Greece in the currency union. IMF and EU monitors suspended their review earlier this month after discovering an unexpected hole in the budget.

“We must not become the easy alibi for the weakness of European and international institutions to manage this crisis,” Venizelos told reporters in Athens Sunday, in comments televised live on state-run NET TV. “We must give a final solution to the attacks on the strongest currency of the world, which is the euro.”

Venizelos said some measures in the five-year 78 billion- euro ($107 billion) medium-term budget plan adopted in June may need to be brought forward to meet targets, after announcing a property levy to help raise 2 billion euros a week ago.

After a two-day meeting of EU finance ministers and central bankers that ended Sept. 17, Sweden’s Anders Borg said Greece hasn’t done enough to meet its budget targets.

“The Greek government has not been consistent in their message on implementation,” Borg said in an interview in Wroclaw, Poland. “They must stick to one message: that they are going to deliver, whatever it takes.”

On Sunday German Chancellor Angela Merkel’s party lost a regional election in Berlin, the last of seven state ballots this year that have seen the coalition parties punished amid voter anger over her handling of the debt crisis.

Greece’s three main aims are to meet targets for 2011 and 2012, create a primary surplus as soon as possible and pursue structural reforms with vigour to shield the country, Venizelos said on Sunday.

Venizelos is blaming a third year of a deepening recession for failing to meet budget targets. The announcements this month including the property levy are a bid to show Greece is serious about addressing its benefactors’ concerns, key to getting the 160 billion-euro package agreed to in July. That would replace last year’s 110 billion-euro package.