06/03/2011 08:21 am ET Updated 6 days ago

Greek Protestors Take Over Finance Ministry In Athens

(AP) ATHENS, Greece — Protesters took over the Finance Ministry building in Athens Friday morning, hanging a giant banner from the roof calling for a general strike, just as Greece wraps up tough negotiations with international officials on new austerity measures.

About 200 protesters from the communist party-backed PAME union blockaded the entrance to the ministry from dawn, preventing employees from entering. They hung a banner over five stories of the front of the building and took down the European flag from the top of the ministry, replacing it with their own union flag.

They said they would continue the blockade for the entire day. Ministry staff were working from a separate building, an official said.

The protest came as experts from the European Union, European Central Bank and International Monetary Fund were wrapping up a review of Greece's implementation of economic reforms in return for euro110 billion ($159.06 billion) in rescue loans from the EU and IMF.

The three bodies, known collectively as the troika, were to issue a statement on their review later Friday, officials said. The review is crucial towards determining whether Greece will receive a fifth tranche, worth euro12 billion, of bailout loans agreed last year.

Greece has so far received euro53 billion from its rescue deal since it first started tapping into the bailout package in May 2010.

Prime Minister George Papandreou was heading to Luxembourg later Friday for emergency talks with Jean-Claude Juncker, who is head of the group of 17 eurozone finance ministers as well as Luxembourg's prime minister. Juncker recently criticized Greece for being slow in cutting debt and reforming the public sector.

Greek officials were also completing tough negotiations on the details of more austerity measures needed to ensure the country can avoid defaulting on its debts. The original bailout plan envisaged the country being able to tap bond investors next year, but with the interest rates on Greek bonds remaining exceptionally high, that appears increasingly unlikely.

Last month, Finance Minister George Papaconstantinou announced remedial austerity measures worth about euro6.4 billion for this year, in order to meet the target of reducing the deficit to 7.5 percent of gross domestic product, from 10.5 percent in 2010.

While euro4.8 billion of that amount has already been announced, the government was expected to outline details of the remaining euro1.6 billion in the coming days. It is also expected to give details of a 2012-15 midterm austerity program, with the details to be announced after a Cabinet meeting in the coming days, officials said.

The new cutbacks will also have to be ratified in parliament, where the governing Socialists have a six-seat majority. But several Socialist backbenchers have voiced strong criticism, and the government this week canceled two planned briefings of its deputies to avoid a showdown.

Sixteen Socialist lawmakers have signed a letter calling for an extensive debate on the proposed new cutbacks before their ratification, with one of the signatories threatening on Friday not to vote for the reforms.

"If the draft legislation is brought to Parliament without prior discussion, I will not vote for it," Thomas Robopoulos told state NET television.

Greece's woes have been compounded by repeated downgrades of its credit ratings – Moody's warned Wednesday that the country had a 50-50 chance of defaulting on its debts.

On Friday, Moody's also cut the ratings of eight Greek banks – National Bank of Greece, Eurobank, Alpha, Piraeus, Agricultural Bank of Greece, Attica, Emporiki and General Bank of Greece.

The agency said "the rising likelihood of a sovereign debt restructuring" could directly affect Greek banks by reducing the value of the government bonds they hold as well as eroding their funding sources.


Nicholas Paphitis in Athens contributed.