Athens: Greece on Monday described loans as "a matter of life and death" for its beleaguered economy as the government prepared to unveil emergency measures to combat the worst debt crisis in the country`s modern history.
"At this moment, loans are a matter of life and death for the Greek economy," government vice president Theodore Pangalos told Ta Nea daily hours before a scheduled speech by Prime Minister George Papandreou on the country`s gaping 300-billion-euro (USD 442 billion) debt.
"Our debt must be stabilised before it can begin to retreat," Pangalos said, adding: "I`ve never seen such a situation in my 29 years in Parliament."
Markets worldwide were roiled last week after Fitch Ratings hit Greece with a credit downgrade, which also sparked fears that other troubled eurozone members could suffer the same fate.
The Greek stock exchange was also rocked by uncertainty, shedding nearly 10 percent of its value in cumulative losses early last week, then briefly rebounding before closing with a fresh 2.41-percent loss on Friday.
The Athens bourse on Monday opened with a gain of 1.95-percent.
Standard & Poor`s has placed Greece`s long-term sovereign credit rating on "negative" watch, warning that it could be downgraded in the next two months if the government failed to rein in its growing deficit.
A third ratings agency, Moody`s, in October also warned Greece of a possible rating cut. A team of analysts from the agency was expected in Athens on Monday on a previously scheduled visit for talks with finance ministry and the Greek public debt management agency (PDMA).
A member of the European Central Bank executive board, Lorenzo Bini-Smaghi, meanwhile told the Italian newspaper La Stampa that Greece now had to take measures to raise its credit rating.
"From our point of view, Greece must implement measures by the end of the 2010 allowing public debt bonds to retrieve an A rating, which will again become the minimum level for our market operations," Bini-Smaghi said.
Fitch Ratings downgraded Greece`s long-term debt ratings to BBB-plus from A-minus last week.
The ECB has eased its rating requirements for government bonds in the wake of the global financial crisis but is expected to restore the minimum A-minus level in 2011.
Bini-Smaghi was referring implicitly to a risk that Greek bonds, at their current rating level, might no longer meet ECB requirements at the end of next year when the central bank reverts to pre-crisis credit rating standards.
The concern for Greece, financial markets and the ECB is that if Greek bonds no longer met the ECB`s minimum requirements, Greek banks that hold large quantities of Greek sovereign bonds would no longer be able to offer them as collateral to participate in regular ECB refinancing arrangements.
This in turn would raise the risk that Greek banks would not be able to access the cheapest source of short-term funding, and would be a big blow to the standing of the Greek banking sector.
With fears mounting for the stability of the eurozone, Papandreou last week reassured his European partners that Greece was "not about to default on its debts."
That pledge appears to have bought him some time.
But by January, he will have to come up with details of what he has said will be a tough three-year economic rescue plan.
Greece`s public deficit is still expected to surge to 12.7 percent of output this year -- well beyond the 3.0 percent limit imposed by the eurozone.
The Greek finance ministry has described the debt crisis as the worst in the country`s modern history.
One of the Prime Minister`s main tasks will be to convince Greece`s influential unions, who hit back with general strikes the last time a major reform -- an overhaul of the pensions system in 2008 -- was attempted.
Papandreou has also called an all-party meeting on Tuesday on fighting corruption that eats up billions of euros annually.
"Adopting decisive measures is easy...implementing them will be tougher," left-wing Eleftherotypia daily warned on Monday.
But another daily, Ethnos, warned that any measures announced by Papandreou were unlikely to have an immediate impact on markets.
"Sadly, world markets do not base their stance on political criteria but on technocratic, and sometimes speculative, criteria," Ethnos said.
"And what is important to them is their own estimate of when the government`s initiative will begin to show results," it said.
Part of the government cost-cutting drive will again target the pensions system as the state seeks to avoid paying over four billion euros next year to support ailing state funds.
Papandreou has ruled out going to the International Monetary Fund for aid or freezing wages, talking instead of trimming Greece`s overblown bureaucracy.
He has also vowed to go after tax evaders, not workers. The government is now planning to enlist hackers in an emergency `tax police squad`, press reports said.
As Papandreou attempts to calm the waters at home, Finance Minister George Papaconstantinou will visit his counterparts in Britain, France and Germany in a bid to convince them that the new Socialist government can handle the crisis.
A crucial part of his tour will be a meeting Wednesday in London with institutional investors.