Page last updated at 23:14 GMT, Tuesday, 5 January 2010

Greece promises to tackle huge government borrowing

A Greek man sells tissues outside closed store
The Greek government and people are struggling to manage their finances

Greece has said it will have its budget deficit back within European Union rules within two years - one year earlier than previously planned.

The country has been under severe pressure from its fellow eurozone countries, as well as the financial markets it depends on to fund its debt.

On Wednesday, officials from the European Union and the European Central Bank are planning to visit the country.

Greece is one of the most heavily indebted countries in Europe.

Its deficit is running at 12.7% of gross domestic product. The EU's limit is 3%.

It needs to raise more money to plug its spending gap, but its finances are not seen as well-run, a factor that makes borrowing money more expensive.

Greece's finance minister, George Papaconstantinou, told reporters that the prime minister had asked for efforts to cut the nation's debt to be speeded up.

"The prime minister asked that the adjustment be front-loaded and that the reduction of the deficit takes place in three years," he said.

Economic woes

The socialist government is in something of a squeeze. It won control just three months ago by promising to boost wages and social spending.

There has been rioting within Greece, partly fuelled by economic woes.

But it simply does not have the money to meet its promises.

Agencies who grade the debt of countries and companies rated Greece's just one step above junk status, taking it out of step with its fellow eurozone members and making it more expensive for it to borrow money.

It is seen as crucial to the stability - and functioning - of the eurozone that Greece gets its finances in order.

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