Greek PM cancels US trip as debt crisis deepens

Greek Prime Minister George Papandreou cancelled a planned visit to the United States today, to deal with a deepening crisis at home, days before international inspectors arrive to go over fiscal shortfalls.

Papandreou was in London, en-route to attend United Nations and IMF meetings, when he decided to turn back after discussing developments with Finance Minister Evangelos Venizelos, government officials said.

"The prime minister judged that he should not be away. He wants to ensure that all of Greece's commitments (to its European Union partners) are fulfilled," government spokesman Ilias Mossialos told reporters.

A government official speaking on condition of anonymity told Reuters pressure was high on Athens from euro zone partners to take additional measures to merit continued funding from a 110 billion euro (US$150 billion) bailout to avert default.

"There is an issue of trust. Our partners want very specific steps and commitments and our record so far unfortunately does not inspire confidence," said the official.

Next week, Greece is due to resume talks with EU and International Monetary Fund inspectors who will judge fiscal progress before releasing the next 8 billion euro loan tranche in October. Greece has said it has cash until next month.

"It's a sign that things are very tight. Papandreou's presence is crucial to make sure there are no setbacks with issues that need to be resolved," said Theodore Krintas, head of wealth management at Attica Bank.

Fiscal slippage this year, which the government blamed on a deeper-than-projected recession, forced the government to slap a levy on property to make up for the shortfall as a target of capping its budget deficit at 7.6 percent of gross domestic product looked out of reach.

Lenders have long warned against one-off measures and more growth-stifling taxes as a way out of the crisis shaking the euro. They have asked for urgent reforms and privatizations and a drastic shrinking of the bloated public sector.

EU economic and monetary affairs Commissioner Olli Rehn has said inspectors from the European Central Bank, European Union and IMF would report back on progress in early October, meaning that the next disbursement of aid to Greece could be paid by mid-October.

Papandreou was to meet United Nations General Secretary Ban Ki Moon in New York on Sunday and IMF head Christine Lagarde on Tuesday. Venizelos is still due to attend an IMF meeting in Washington later in the week.