Greece seems not to have met the terms of its international rescue package, a senior European policy maker said, while Athens countered that playing a "blame game" was hindering any chance of resolving the crisis.
"Greece has apparently not fulfilled the conditions sufficiently of late. The issue of privatizations will be the most sensitive point here," Austria's Kronen Zeitung quoted European Central Bank Governing Council member Ewald Nowotny on Friday as saying.
It appeared to be the first public confirmation that a joint inspection team from the ECB, the European Commission and the International Monetary Fund now in Athens has found shortcomings in Greece's implementation of its bailout program.
Greek Prime Minister George Papandreou, hit back at criticism, saying euro zone countries must work together to shore up the common currency and tackle economic problems.
"We are looking for scapegoats, we are playing a blame game," he told a meeting of centre-left politicians in Oslo.
"We are saying the North is to be blamed, the periphery is to be blamed, the migrants are to be blamed. Obviously this is incapacitating Europe, we are losing the potential we have."
On Thursday, Greek government sources told Reuters the troika inspectors were pressing Athens to cut public spending further to make up for a likely shortfall in revenue this year.
"They are forming an opinion that there are difficulties," said one senior government official who requested anonymity. "They are concerned there is a high risk revenue targets will not be met and are pressing for more spending cuts."
At stake is a €12-billion tranche of aid due next month and key to paying €13.7-billion of immediate funding needs. Without it, Greece could effectively default.
A senior EU source involved in crisis management in the euro zone debt crisis told Reuters Greece would have to commit itself to taking additional measures this year to meet its targets.
He also said European partners needed to see a breakthrough in Greece's stalled privatization program so the country can raise more funds by offering those assets, or securitized future revenues, as collateral for future loans.
Euro zone finance ministers would receive the inspectors' report at the end of May and were likely to take decisions on the next steps for Greece in June or more probably July, given the time needed to secure agreement among multiple stakeholders and ensure broad political support in Greece, he said.
Greek ministers have acknowledged that Athens is unlikely to be able to return to capital markets to raise €27-billion next year, as foreseen in its EU/IMF program, and a higher amount in 2013.
The EU source said most of the funding shortfall would have to be raised through collateralizing or securitizing the proceeds of privatization, with the rest coming from the euro zone and the IMF.
Greece is seeking a further extension of maturities on its €110-billion in rescue loans and a further cut in the interest rate on euro zone lending, which was reduced by one percentage point in March.
Mr. Papandreou suggested that what he called the blame game in the euro zone was exacerbating Greece's problems by creating an atmosphere of gloom which would force Athens to pay ever higher interest rates to borrow money.
"Even the IMF today is saying that our (Greek) debt is sustainable, we can manage our debt without restructuring. However, the markets are pounding us incessantly, the media are predicting a doomsday, and this is promoting a culture of fear."
The yield on the 2-year Greek bond dropped on Friday but still exceeded 25 per cent, while those on 5-year paper eased to around 21 per cent, levels which make borrowing from the markets completely prohibitive.