Sweden's finance minister said on Tuesday Greece's deficit-reduction plan was not enough, raising pressure on Athens to do more to prevent a swollen debt and broader financial market trouble from getting out of hand.
As European Union finance ministers met in Brussels, Luxembourg's Jean-Claude Juncker also vented frustration at the irrational behavior of financial markets that have driven the euro lower and bond yields higher in response to Greece's woes.
Greece is the first country in 11 years of European monetary union to require a political pledge of support as fears over its bloated debt sparked a market attack that makes it even harder for it and other governments to service their debt.
With two lots of sovereign debt of more than 8 billion euros each to refinance on the markets in April and May, Athens is on the frontline, and markets also have other euro zone countries such as Spain and Portugal in their sights.
This is quite an urgent situation, said Swedish Finance Minister Anders Borg, whose country is part of the 27-country European Union but not the 16 that use the euro currency.
What we have seen so far is not enough. We need more steps when it comes to taxes and ... expenditure, if they want to build credibility in the market.
Tuesday's meeting followed talks among euro zone ministers on Monday where Greece was told it would must prove itself day by day on deficit reduction in return for the support pledge it got from European leaders last week, and also warned it may well need to do even more than it has promised so far.
The key thing is not the next 30 days. It is what happens today, tomorrow and the day after, French Economy Minister Christine Lagarde said.
What we all want to happen and what we all want to see happen is implementation of the Greek plan that we have approved and will be confirmed today.
Athens has announced fuel tax increases, cuts in public pay and pension reforms, triggering protests, as it strives to deliver on a commitment to reduce its public deficit from 12.7 percent of GDP to less than three percent in 2012, starting with a four-point cut this year.
Part of its battle is one of credibility as a result of years of official statistical reporting on its finances that Sweden's Borg has called basically fraudulent.
Greek Finance Minister George Papaconstantinou appealed for patience at Monday's euro zone meeting and suggested it may take more than last Thursday's verbal support pledge by EU leaders to curb market speculation that not only threatened Greece.
While there was no news of concrete rescue steps, Papaconstantinou got some words of sympathy from Juncker, Luxembourg's prime minister and chairman of monthly meetings of euro zone finance ministers of the kind held on Monday.
We shouldn't accept to be the target of financial markets, said Juncker. I am concerned by this irrational way of behaving of financial markets.
But he too said the ball was in Athens' court.
Our decision is crystal clear. In the case Greece does not attain the target of reducing its budget (deficit) by four percent, Greece will have to take additional measures, he said.
The extra interest investors demand for holding Greek debt rather than German bonds rose by almost a third of a percentage point on Tuesday to 3.35 percent, its highest in a week.
Greece has to report back to its European partners on progress by March 16.
Tuesday's meeting of EU ministers was due to officially step disciplinary action against Greece up to the last stage before penalties that include possible fines for breaching the EU's deficit cap of 3 percent of GDP.
Under that procedure, if Athens does not take effective action over the next four months to bring the deficit down, the ministers could slap a fine on it of up to 0.5 percent of GDP.
If risks to Greece's deficit targets materialize, then Greece will announce additional steps by mid-March, European Monetary Affairs Commissioner Olli Rehn said.
Greece confirmed last week it remained in recession in the last quarter of 2009, which deprives it of one natural channel of debt reduction.
The euro zone as a whole barely grew either as German GDP growth halted and Italy and Spain registered GDP drops in the same period. (Additional reporting by Brian Rohan and Jan Strupczewski; writing by Brian Love, editing by Mike Peacock)