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Eurozone nations to tighten oversight of member economies

Luxembourg’s Finance Minister Jean Claude Juncker, right, speaks with European Central Bank President Jean Claude Trichet during a media conference after the meeting Friday.

Associated Press

Luxembourg’s Finance Minister Jean Claude Juncker, right, speaks with European Central Bank President Jean Claude Trichet during a media conference after the meeting Friday.

MADRID — Eurozone nations agreed Friday to tighten joint oversight of the economies in Europe's currency union in an effort to stem a government debt crisis that has already forced them to make billions of euros in standby loans available to troubled Greece if it can't borrow from markets.

Jean-Claude Juncker, the head of a group of finance ministers from the 16 countries that use the euro, said they would start discussing how member economies were faring, as a step toward tackling wider problems beyond the group's limited focus on debt and deficit levels.

Spain and Finland would come up for review first, followed by Portugal and Luxembourg, he said.

Both Spain and Portugal have rising debt levels and have attracted some attention from markets looking to see if Greece's debt problems could spread to other vulnerable euro economies which are facing high unemployment and sluggish economic growth.

Portugal received a warning from the European Union's executive commission this week that it might need to make bigger budget cuts if a hoped-for economic recovery fails to provide extra revenue the government is counting on.

Markets have hiked Greek borrowing costs because they believe the country might be unable to repay debt. Greece needs to borrow about $73 billion this year — $15 billion of that next month — and says the high costs could force it to seek a bailout from eurozone nations and the International Monetary Fund.

EU Economy Commissioner Olli Rehn has criticized eurozone members for "rather optimistic" assumptions that the economy would bounce back quickly, warning that many of them may need to increase budget cuts if they aren't on track to bring down deficits.

Eurozone nations to tighten oversight of member economies 04/16/10 [Last modified: Saturday, April 17, 2010 12:03am]

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