Global General

Protesters take over finance ministry in Athens

(Agencies)
Updated: 2011-06-03 17:08

A portrait of Greek Prime Minister George Papandreou, featuring him as a clown, is hung from a noose during a rally against a new austerity package in Athens' Constitution (Syntagma) square June 2, 2011. The protest, on its 9th day, was organized through a Facebook group called "The Indignant" following similar demonstrations in Spain. [Photo/Agencies]

Greek officials were also completing tough negotiations on the details of more austerity measures needed to ensure the country can avoid defaulting on its debts. The original bailout plan envisaged the country being able to tap bond investors next year, but with the interest rates on Greek bonds remaining exceptionally high, that appears increasingly unlikely.

Last month, Finance Minister George Papaconstantinou announced remedial austerity measures worth about euro6.4 billion for this year, in order to meet the target of reducing the deficit to 7.5 percent of gross domestic product, from 10.5 percent in 2010.

While euro4.8 billion of that amount has already been announced, the government was expected to outline details of the remaining euro1.6 billion in the coming days. It is also expected to give details of a 2012-15 midterm austerity program, with the details to be announced after a Cabinet meeting in the coming days, officials said.

Prime Minister George Papandreou was heading to Luxembourg later Friday for emergency talks with Jean-Claude Juncker, who is head of the group of 17 eurozone finance ministers as well as Luxembourg's prime minister. Juncker recently criticized Greece for being slow in cutting debt and reforming the public sector.

Greece's woes have been compounded by repeated downgrades of its credit ratings - Moody's warned Wednesday that the country had a 50-50 chance of defaulting on its debts.

On Friday, Moody's also cut the ratings of eight Greek banks - National Bank of Greece, Eurobank, Alpha, Piraeus, Agricultural Bank of Greece, Attica, Emporiki and General Bank of Greece.

The agency said "the rising likelihood of a sovereign debt restructuring" could directly affect Greek banks by reducing the value of the government bonds they hold as well as eroding their funding sources.