EU says Greece needs more measures to meet bailout terms

Euro zone policymakers piled pressure on Greece to drive through more austerity after bleak economic forecasts showed the debt-choked country would miss fiscal targets without further reforms.

Athens would fall short of its 2011 deficit target by two percentage points if it left policies unchanged, the European Commission said ahead of a meeting of euro zone finance ministers and the conclusion of an EU/IMF inspection of Greece.

"Because of weaker than expected growth last year, plus some fiscal slippages, there is need to take additional measures in fiscal consolidation still this year," EU Economic and Monetary Affairs Commissioner Olli Rehn told a news conference.

"How much will depend on the assessment of our mission currently in Athens."

European Central Bank Governing Council member Ewald Nowotny said Greece was not meeting the terms of the 110 billion euro bailout which saved it from bankruptcy last year, giving the first public confirmation that the ongoing EU/IMF inspection team has found shortcomings.

"Greece has apparently not fulfilled the conditions sufficiently of late. The issue of privatisations will be the most sensitive point here," Austria's Kronen Zeitung quoted Nowotny as saying.

Without a shift of course, Greek debt would rise to 157.7 percent of gross domestic product this year and to 166.1 percent in 2012, rather than be 145.2 and 148.8 percent envisaged by the EU/IMF plan, the EU executive said in its twice-yearly forecasts.

It would also have a budget deficit of 9.5 percent of GDP this year rather than the 7.6 percent it was targeting.

Greek government sources told the EU/IMF inspectors were pressing Athens to cut public spending further to make up for a likely shortfall in revenue. They will also conclude a much awaited analysis of Greece's debt sustainability."They are concerned there is a high risk revenue targets will not be met and are pressing for more spending cuts," said one senior Greek government official who requested anonymity.