EU's Almunia says Greek fiscal cuts achievable

European Commissioner in charge of Finance Joaquin Almunia speaks during a news conference in Brussels November 11, 2009.

BRUSSELS (Reuters) - Greece's fiscal cutback plans are ambitious, surrounded by risks but achievable and the European Commission fully endorses them, EU Economic and Monetary Affairs Commissioner Joaquin Almunia said on Monday.

Almunia's remarks, exclusive to Reuters, come two days before the Commission publishes recommendations on how and by when Greece should reduce its huge budget deficit below the European Union's ceiling of 3 percent of gross domestic product.

"What we are saying to the Greek authorities is: your stability programme has established ambitious targets and objectives and we fully endorse these ambitious objectives," Almunia said.

"We consider that the achievement of these objectives in the coming three years, before the end of 2012, is absolutely necessary. These objectives are achievable but they are surrounded by risks."

The Commission, the 27-country EU's executive, will publish on Wednesday its opinion on the Greek long-term deficit-cutting plan, which aims to reduce the budget shortfall to below 3 percent in 2012 from 12.7 percent in 2009.

Such a recommendation can be issued under the new EU treaty when the economic policies of an EU member are not in line with the broad policy guidelines adopted by the bloc or risk jeopardising the proper functioning of the 16-country euro zone.

Greece's financial problems have sparked talk about a possible bailout by the EU and fears about the stability of the euro area.

EXTRA MEASURES MAY BE NEEDED

Almunia said the Greek government was aware of the risks surrounding its deficit plan.

"In our recommendations, we are creating a process of monitoring the implementation of the program that includes the need to adopt additional measures in case some of those risks will materialise," he said.

"We will not accept slippages on the path to the targets," he added.

"Every time we see slippages, because some risks materialise, we will ask for additional measures to correct these slippages. We take note that the Greek authorities in the stability programme stand ready to immediately adopt additional measures if, in our monitoring process, we ask them for it."

He said that in its recommendations the Commission would ask Athens to implement all the measures outlined in its stability programme involving expenditure cuts, revenue increases and structural reforms.

"For this to happen, a very precise implementation and monitoring of the implementation is needed," Almunia said.

"Never before have we established so detailed and tough a system of surveillance, monitoring and reporting and, if necessary, adoption of additional measures to avoid slippages," he said.

The Commission recommendations will be adopted by EU finance ministers at their next meeting on February 15-16. Greece will have to submit its first report on the implementation of the steps by March 16, then by May 15 and after that every three months.

(Editing by Dale Hudson)