Top financial officials from eurozone nations are grappling with Greece's worsening debt crisis as the country looks to be on the edge of bankruptcy.
The revelation that it will not meet its deficit reduction target sent markets tumbling yesterday and calls into question whether Athens will receive the next installment of the bailout loan it needs to pay its day-to-day bills. If it does not get it by mid-October, it could go bankrupt and would be unable to pay pensions and salaries.
As a result, markets around the world slumped with the FTSE 100 falling back below the 5,000 mark; this continues the London market's poor performance after enduring its worst quarter in nine years in the three months to the end of September when 14% was wiped off its value.
European Monetary Affairs Commissioner Olli Rehn would not be drawn on what Greece's creditors will do with the new information, saying only that they were still reviewing the data.
"We are currently assessing whether Greece will meet its fiscal targets with the current measures... I want to do our job first properly; it seems that Greece is likely to miss the target," he said.
Although the ministers have already said they won't decide on the next payment at their meeting in Luxembourg, the issue is sure to be high on the agenda.
Markets have been exceptionally volatile in recent weeks, as they look for any hint that European leaders have a credible way to steer Greece back to health and prevent its debt problems from spreading. The Greek announcement confirmed investors' fears that even the country's dramatic spending cuts will not be enough.
Greece's finance ministry said that the country will run a deficit of 8.5 % of economic output, far above the promised 7.8 % of GDP.
Part of the problem is that since Greece's economy is shrinking, the government is taking in less and less money. That in turn means it has to cut even more to reduce the size of its deficit and make a dent in its debts.
In 2012, Athens' debts are projected to reach 172.7% of gross domestic product, while the deficit will drop to 6.8%.
The announcement will also force the eurozone to decide whether they will go ahead with a second rescue package tentatively agreed in July. Germany, among others, has been pushing to reopen that deal.
Meanwhile, a Qatari sovereign wealth fund has taken a 10% stake in a Greek gold-mining firm, in a move that confirms that European politicians are increasingly keen to accept assistance from emerging economies in order to ease the eurozone's debt crisis.