Athens, E.U. appear closer to a deal on Greek debt crisis

ATHENS -- Greece may soon announce new steps to cut its budget deficit, a government minister said Sunday, amid signs that Athens is nearing a deal with European Union governments to ease the Greek debt crisis.

Economy Minister Louka Katseli said Prime Minister George Papandreou would review Greece's fiscal plans, after an E.U. mission to Athens last week decided that the country's austerity measures were not strong enough to reassure financial markets.

"If more measures are to be taken, they will be announced soon," Katseli told state television. "The red line for everyone in this government is that the measures are effective, bringing additional revenues, and that they are socially just."

E.U. Economic Affairs Commissioner Olli Rehn was due to visit Athens on Monday for talks with Greek officials about the crisis, which has rocked Europe's debt market and undermined investors' confidence in the shared euro currency.

The market has been speculating that Rehn's visit, if successful, could move E.U. governments closer to announcing some form of emergency aid for Greece in exchange for a pledge by Athens to take fresh budget steps.

A German member of the European Parliament, Jorgo Chatzimarkakis, said Saturday that Germany, France and the Netherlands would buy Greek bonds in the deal, using state-run banks such as Germany's KfW and France's Caisse des Depots.

It was unclear how Chatzimarkakis, who is not a high-profile politician in Germany, might know of such a plan. His comments echoed a similar report Saturday in the major Greek newspaper Ta Nea, which quoted unnamed sources.

German Chancellor Angela Merkel said in a television interview Sunday that she was grateful that the Greek government was planning "very courageous" steps to curb its budget deficit.

She repeated comments, first made last week, that the euro was in its toughest period since its launch in 1999 -- possibly an effort to prepare German public opinion, which is strongly against aiding Greece, for intervention by Berlin in the crisis.

But Merkel stressed that no decision had been made on financial assistance to Greece and that Berlin continued to expect Athens to take whatever steps were necessary to resolve its problems.

"There have been absolutely no other decisions taken. I would like to say that quite clearly," Merkel said. "Greece has to do what's necessary for Greece. But that is also important for all of us."

The Dutch government said there were no plans to buy Greek bonds and that the top priority for the Netherlands was to ensure the stability of the euro.