In the continuing drama over whether Greece will get the next slice of rescue funds from its official creditors, another critical financial test has been temporarily forgotten: the country's plan to exchange old government bonds for new, The Wall Street Journal Brussels Beat blog reported. As Greece's disputes with its lenders have intensified, the bond exchange has looked a better and better deal for investors. The exchange, the terms of which could be announced next month, was the price of securing German government support for the second bailout of Greece in July.

Greece adopted yet more austerity measures on Wednesday to secure a bailout instalment crucial to avoid running out of money next month, as the IMF warned that Europe's sovereign debt crisis risks tearing a giant hole in banks' capital, Reuters reported. The Greek cabinet agreed to cut high pensions by 20 percent, put 30,000 civil servants in a "labour reserve" on a road to redundancy, lower the income threshold for paying tax and extend a real estate tax, a government spokesman said.

Greece said it had "a productive and substantive discussion" with its official creditors on Monday in talks aimed at releasing a new slice of bailout aid, and a Greek finance ministry official said an agreement was close, The Wall Street Journal reported. U.S. stocks, which had initially declined on Greek-induced gloom, recovered some of their losses late in the trading day after the Greek statement.

Greece's government was meeting over the weekend after receiving fresh warnings from its euro-zone partners that future aid will be withheld unless it can produce conclusive steps to bring its unruly budget deficit into line, Dow Jones reported. Prime Minister George Papandreou aborted a planned trip to New York and Washington this week to preside over emergency meetings in Athens to identify new savings that will convince other euro-zone governments that targets can be met.

Christine Lagarde, head of the International Monetary Fund, on Thursday raised the spectre of her organisation withholding its portion of an €8bn ($11bn) aid payment Greece needs by the end of this month, saying Athens had implemented requisite economic reforms “in parts”, the Financial Times reported. Speaking ahead of a highly anticipated meeting of IMF, US and European finance officials in Poland, Ms Lagarde said Athens had to re-ignite “the urge to deliver on commitments” made by its government after a period during which “momentum had slowed down”.

Athens’s inability to get a grip on the debt problem is rattling markets and giving rise to talk of a notion that until recently has been considered taboo: a eurozone without Greece, The Christian Science Monitor reported. Greece's introduction last weekend of a new real estate tax and reduction in elected officials' pay are being called too little, too late to address its deep debt.

Greece took desperate measures last nighton Sunday to calm fears that it is on the brink of default – or might even leave the eurozone – by announcing a new property tax to plug budget shortfalls, The Guardian reported. With the debt-stricken country at serious risk of being denied an €8bn (£6.9bn) rescue loan from the EU and International Monetary Fund, Athens said that it would apply the levy immediately.

Senior EU officials are speaking privately about a dangerous new phase in the two-year-old euro zone crisis. Greece - the spark for the conflagration - is close to intractable and Italy, the region's third largest economy and biggest bond market, is cause of grave concern, Reuters reported. Dutch Prime Minister Mark Rutte provided perhaps the clearest indication yet that Greece's 10-year euro membership might not be forever, outlining on Wednesday a plan under which a member state could leave the currency bloc if it consistently and repeatedly ignored budget deficit and other obligations.

Greece's finance minister pledged Tuesday to speed up a series of delayed reforms meant to cut flab from the country's bloated public sector without immediate job losses, open up tightly regulated professions to competition and kick-start an ambitious privatization plan, the Associated Press reported. "Greece is not the pariah of the European Union, it is not a permanent sore and problem," Evangelos Venizelos told reporters after a cabinet meeting. "It is an equal, competitive country that has a very serious problem regarding its public debt and fiscal deficit.

Greece is likely to miss its budget-deficit targets this year in the face of a deep economic contraction that is turning out to be even more severe than forecast, government officials said Thursday, conceding that the country is likely to face demands for still more budget cuts, The Wall Street Journal reported. Greece's deficit could exceed 8.5% of gross domestic product, compared with an official forecast of 7.6%, as the government struggles to meet revenue goals, two senior Greek government officials said. The deficit is now estimated at "around 8.5%, or a bit higher.