During a visit to Athens, German Foreign Minister Guido Westerwelle praised Greece's fiscal reform plan aimed at pulling the Mediterranean nation out of a deep budget deficit that is threatening Europe's common currency, the Euro.

Following a meeting with Greek Prime Minister George Papandreou, Westerwelle expressed Germany's support for the efforts of the Greek government.

"I'm convinced that these consolidation, reform, and growth programs deserve a chance and they will work," Westerwelle said. "And that's the reason I'm here: We're standing by Greece."

However, last week the German government made a point of flatly rejecting any direct fiscal aid to finance the Greek deficit. German Finance Minister, Wolfgang Schaeuble, has insisted that the 16 eurozone countries were not obliged to bail out Greece from its financial troubles.

EU heaping pressure on Greece

Athens is feeling the heat from the European Union and has seen its credit rating downgraded by all three major rating agencies.

The European Commission is expected to make an official announcement about the Greek deficit on Wednesday, but said already on Monday that Greece's plans to tackle its mountain of debt were "achievable." It warned however that "additional measures" were necessary.

EU Commission spokeswoman, Amelia Torres, said Greece would likely be given four months to reach "very precise objectives" under close surveillance by Brussels.

Early last year, the EU Commission launched disciplinary action against Greece because it had allowed its deficit to exceed the EU limit of three percent of gross domestic product, and it has since complained that the Greek government has taken no effective steps to rein in its deficit.

However, Greek Finance Minister George Papaconstantinou said the problem was not unique to his country.

"Following Greece, there are other countries, like Spain and Portugal [in a similar situation]," said Papaconstantinou at an economic conference in Athens on Tuesday. "This is why the Greek issue, despite its particular Greek characteristics, is also a euro zone issue."

He pledged Athens' support to the idea of selling eurozone bonds as possible solution.

Greek PM outlines cost-cutting plans

As the pressure mounts, Greek Prime Minister George Papandreou has said that his government was ready "to draw blood" to beat the corruption, waste and mismanagement responsible for the debt crisis.

He has outlined sweeping public sector cuts to bring Greece's deficit in line with eurozone requirements by 2013, including a cut in welfare spending, tax reform, and a public sector wage freeze.

Papandreou has also proposed major curbs on public hiring, a 10 percent cut in social security and a "significant reduction" in military spending. On top of that, he has also called for a 90 percent tax on bank bonuses.

Twenty of the EU's 27 member nations are currently running deficits above the three-percent threshold.

mz/gb/dpa/AP/AFP/Reuters
Editor: Sonia Phalnikar