UPDATE 1-Greece will need serve measures-Rehn to paper

Thu Mar 4, 2010 3:22am EST Related News RPT-EU"s Rehn says Greece will need further measures-paperThu, Mar 4 2010RPT-EU"s Rehn says Greece will need further measures-paperThu, Mar 4 2010Greece should meet "10 budget target: deputy ministerThu, Mar 4 2010EU urges new Greek cutsMon, Mar 1 2010EU urges new Greek cuts, cabinet to meet on WedsMon, Mar 1 2010

* Sees more action on public finances needed in 2011, 2012

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* Says steps taken for 2010 sufficient if applied fully

* Says euro zone ready to take action to guarantee stability

* Aim is to avoid spill-over effect

(Adds Rehn comments, background)

MILAN, March 4 (Reuters) - Greece will need to take furtheraction in 2011 and 2012 to repair its public finances, EUEconomic and Monetary Affairs Commissioner Olli Rehn said in aninterview on Thursday.

The extra austerity measures announced by the Greekgovernment are sufficient for 2010 providing they are appliedfully, Rehn told Italy"s daily newspaper Il Corriere della Sera.

"But further on, in 2011 and 2012, further measures will benecessary for Greece... for medium-term consolidation," he wasquoted as saying.

Greek Deputy Foreign Minister Dimitris Droutsas said onThursday that an extra savings package would allow hisgovernment to achieve its 2010 budget target. [ID:nBAT005185]

Rehn, who earlier this week led an EU delegation to Greece,said it was important that the new measures, which wereannounced on Wednesday, helped Greece -- and by extension thewhole euro zone - regain greater stability.

He said the euro zone would "if necessary ... carry outcoordinated action to guarantee (Greece"s) stability ... We havethe resources to do so."

Asked if this implied a bailout by the European Union, Rehnsaid: "We are not speaking about this today. Greece hasrestarted well," he said.

Rehn said there are other countries in both the South andthe North of Europe that have serious problems.

"The aim of all this is precisely to avoid a spill-overeffect ... from one country to another," he said.

He said responsibilty for Greece lay with the EU rather thanthe European Central Bank or the International Monetary Fund.

Greece has said it might look to the IMF for a rescuepackage if the EU failed to provide support.

Rehn said there were lessons to be learnt from the crisis onthe importance of financial monitoring in the euro zone. "Ifnecessary we could send not just recommendations to the memberstates but actual warnings," he said.

(Reporting by Stephen Jewkes; editing by John Stonestreet)

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