Europe defers decision on unblocking frozen loans for Greece

Europe deferred a decision unblocking of frozen loans to Greece, ordering Athens to slash government spending and sell off the family silver, even as it ruled out today any default or eurozone exit.

According to Eurozone chief Jean-Claude Juncker a rescue fund to bail out Greece, that was agreed in July but has remained frozen with auditors now demanding a three-year revision of the country's spending plans, would be made more "efficient," though he refused to increase the the bail out amount.

Greek prime minister George Papandreou, who announced deep cuts for 2012 to unblock promised EU and IMF funds, would now be required to agree to "additional measures" with international auditors "to close any remaining gaps for 2013 and 2014," according to Juncker.

His comments come following seven hours of talks between eurozone finance ministers in Luxembourg.

The ministers had made light of chances of €8 billion in loans originally set for September being re-activated, which prompted Greek finance minister Evengelos Venizelos to say that Greece was being made a "scapegoat" for wider eurozone debt troubles.

Finally, Venizelos had to be sent back with a demand to secure creditors' agreement on a huge overhaul of the rapidly shrinking Greek economy, to allow a "definite and final decision" on the loan funding before the end of October.