Greece's financial fate continued to hang in the balance on Wednesday after eurozone finance ministers cancelled a meeting in which they had been expected to approve a second bailout for the country.

Members of the Eurogroup agreed late on Tuesday to put off the meeting and hold a telephone conference instead after Athens failed to come up with a further 325 million euros ($428 million) in budget cuts needed to meet its austerity target for 2012. The Greek cabinet discussed the issue late into the night. Following that meeting, a government source said Prime Minister Lucas Papademos would unveil a plan for plugging the gap “in the coming days.”

Waiting on guarantees

Eurozone governments are also demanding that all leading Greek politicians provide written guarantees that they will implement all pledged austerity measures following the next general election, which is expected to be held in April.

The failure of at least one of the party leaders to do so was cited as at least part of the reason for the cancellation of Wednesday's meeting.

"I did not yet receive the required political assurances from the leaders of the Greek coalition parties," said a statement released by Luxembourg's prime minister, Jean-Claude Juncker, who is also the head of the Eurogroup.

Juncker appeared to be referring to Antonis Samaras of the conservative New Democracy party, who is seen as having a good chance of becoming the country's new prime minister. In the past, he as hinted that he could try to renegotiate the bailout package if he takes power. However, a source within his party told the Reuters news agency on Wednesday that he planned to send a letter of commitment to the bailout deal by the end of the day.

Greeceneeds the 130-billion-euro ($170 billion) bailout to avoid going into default next month. Its next debt repayment of 14.5 billion euros is due on March 20.

There was even more bad news for Athens on Tuesday after fresh data showed that the downturn in the Greek economy had accelerated. Greece's economy shrank by seven percent in the fourth quarter of 2011 compared to a contraction of five percent in the third quarter.

pfd/slk  (Reuters, AFP)