EU develops bailout options for Greece

The EU has developed a set of options to help Greece overcome its financial crisis, which has unsettled the euro currency and markets globally, officials said today.

But Athens will have to arrange for possible loan guarantees with individual EU governments, they said.

"There are intensive consultations on a bilateral basis in case Greece needs support for a special loan guarantee that a number of countries could come to provide," said Cristina Gallach, spokeswoman for the Spanish presidency of the 27-nation EU.

Ms Gallach emphasised that Athens has said it would not need any such help, but that the EU must be ready "just in case Greece comes and says we need a bail-out".

Technical work has been going on for several weeks to prepare a set of options on how to help the Greek government carry out its austerity programme, which is designed to gradually cut the country's massive budget deficit, said Amadeu Altafaj Tardio, spokesman for the EU Economic Commission.

He did not elaborate on the details, but said the options will be submitted to European financial and economic ministers who will meet next week.

Athens has pledged to slash its budget deficit from an estimated 12.7% of gross domestic product in 2009 to 8.7% this year - cutting the annual shortfall from €30.9bn to 22.5bn.

EU Economy Commissioner Olli Rehn has also said on several occasions that the EU is prepared to propose a European mechanism for co-ordinated action if requested by Greek authorities.

Greece said it is rapidly adopting EU-proposed financial reforms, and that the majority of those recommendations have already been implemented. On Friday, Athens said it had exceeded its deficit-cutting targets in January and February.

Last week, the government toughened its austerity measures, with wage cuts and tax hikes worth an extra €4.8bn in savings, in an effort to ease a debt crisis that has unsettled the euro currency and global markets.

The European Commission is receiving help from the European Central Bank and International Monetary Fund to monitor Greece's economy, and has set a March 16 deadline to show improved finances.