February 17, 2010 at 12:32 PM CST - Updated June 15 at 8:15 PM
ATHENS, Greece (AP) - Hundreds of striking finance ministry and customs employees held a protest rally in Athens Wednesday, as Prime Minister George Papandreou prepared to meet opposition leaders and host a Cabinet meeting to discuss Greece's financial crisis.
Greek unions have been opposing the new Socialist government's harsh austerity measures, which were imposed in an effort to pull the country out of its worst debt crisis in decades - one that has seen its deficit swell to a massive 12.7 percent of economic output.
European finance ministers warned Athens on Tuesday that it would have to impose even tougher budget cuts if its current austerity program can't reduce the deficit to 8.7 percent this year. Athens has until March 16 to report back to the EU on its progress.
Adding to the tensions, a bomb exploded Tuesday evening at the offices of American financial services firm J.P. Morgan in an upscale central Athens neighborhood, causing damage but no injuries. The blast, for which nobody has yet claimed responsibility, occurredafter a warning telephone call to an Athens newspaper.
It also came after Greece was given just days to explain its use of complex financial deals with investment bank Goldman Sachs to allegedly mask the size of its debt.
The EU's top economy official, Olli Rehn, said Tuesday that he wanted the Greek government to supply answers by Friday on how it used currency swaps and how that affected debt and deficit figures.
A day after the Brussels meeting, however, stock markets were rising again, as upbeat corporate earnings reports deflected worries about Greece's debt problems. Spreads on Greek government bonds over the equivalent German bond - a key indicator of market confidence - narrowed slightly to 309 basis points, down from about 320 on Tuesday afternoon, while the Athens Stock Exchange general index inched up 0.75 percent in early afternoon trading.
Austerity measures announced so far include a freezing of civil servants' salaries, cuts in stipends and bonuses, a two-year increase in the average retirement age and higher taxes.
Finance Ministry employees went on a four-day strike Tuesday, and customs workers walked off the job for three days on Tuesday to protest the measures that they say will slash their incomes.
"Enough. The crisis wasn't caused by civil servants. The bill should go to the wealthy," read a banner carried by striking workers, about 500 of whom marched from the Finance Ministry to the nearby Parliament building.
Last week, striking civil servants shut down schools, grounded flights and walked out of hospitals in a 24-hour protest. A broader, general strike is planned for Feb. 24.
The customs workers' strike was affecting imports and exports, while gas station owners issued appeals through the media to keep drivers from rushing to fill up their cars with fuel because it could cause a run on supplies until the end ofthe strike on Friday.
Prime Minister George Papandreou, recently returned from a visit to Moscow, was to meet with the main opposition conservative party leader, Antonis Samaras, Wednesday afternoon to discuss the economy. He was also to chair a Cabinet meeting in the evening.
Papandreou, whose Socialist PASOK party came to power in October, has been seeking consensus from the opposition to help deal with the crisis.
The Socialists sharply revised the 2009 budget deficit after winning general elections last October - from a 3.7 percent forecast months earlier - sending Europe into renewed financial crisis over mounting debts by Greece and several other countries using the euro.
A PASOK spokesman said Tuesday that the party plans to call on parliament to investigate how the previous conservative government relayed faulty fiscal data to the European Union. The probe could lead to prosecution if politicians are found responsible of wrongdoing. PASOK has 160 deputies in the 300-seat parliament.
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