BRUSSELS — European finance ministers bluntly told Greece on Monday to prepare even tougher spending cuts and new taxes, including a tax on luxury goods and cars, to fix its debt crisis.
The 16 countries that use the euro warn that Greece will need to take the extra measures if current cutbacks don't bring its massive deficit down from 12.7 percent of economic output to 8.7 percent this year.
Greece has until March 16 to report back on its progress.
Eurozone nations have pledged to help Greece if it can't repay its debts — but want Greece to make big spending cuts first. They are taking action because fears of a Greek default have threatened to spark a wider European debt crisis, undermining the euro and leading to serious questioning of the rules underpinning the shared currency.
Luxembourg Prime Minister Jean-Claude Juncker, who led the talks, said Greece had agreed to take further action if it looks like it can't hit the target. All eurozone finance ministers — except Greece — would vote on whether such action was needed and "would impose on Greece" extra measures, he said.
The details of new spending cuts would then be agreed with the European Commission and would focus on raising value-added taxes, setting new excise duties on luxury goods — including private cars — and new cuts to capital expenditure.
Juncker said Greece's debt crisis was "first and foremost a Greek problem and an internal Greek problem."
But if Greece's budget plans and extra action does not slash the budget deficit, he said the eurozone would step in and "will take determined and coordinated measures to safeguard the stability of the eurozone as a whole," he said, repeating a statement from EU leaders last week.
He refused to give details about how the eurozone would come to Greece's financial rescue if it comes to that.
"We do not feel it would be wise to have a public discussion of such instruments, but if those instruments are called for, then you can take it that we will have those instruments," he told reporters.