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Greek PM to meet eurozone leaders this week

Category: Business

Published: 20th Aug 2012 11:19:53

Greek Prime Minister Antonis Samaras is to hold meetings with eurozone leaders this week, which could help determine the fate of his country in the bloc.

In the meetings, Mr Samaras is expected to request for more time on Greece's austerity programme.

That has provoked further frustration in Europe over Greece's ability to honour its commitments.

Its creditors are waiting for a report next month assessing its progress over reforms in exchange for fresh bailouts.

On Wednesday, Mr Samaras is expected to meet Jean-Claude Juncker, the Luxembourg premier who heads the group of eurozone finance ministers.

He is then due to meet German Chancellor Angela Merkel on 24 August and French President Francois Hollande on 25 August.

Stuck in recession, Greece is heavily in debt and has implemented more than 43bn euros (£33.8bn) worth of austerity measures since 2010 in order to try to bring down its budget deficit.

The report due next month - which is being conducted by inspectors from what is known as the troika, the EU, International Monetary Fund and the European Central Bank - will assess Greece's progress on implementing reforms, in particular its spending cuts and efforts to raise revenue by clamping down on tax evasion.

The German weekly Der Spiegel has reported that an initial assessment by the inspectors suggested Greece may need to cover a financing hole of up to 14bn euros over the next two years, rather than the 11.5bn Athens has identified for 2013 and 2014.

Last week, Greece was able to raise 4.06bn euros with an issue of three-month treasury bills, but the government had to offer an interest rate of 4.43% to attract investors.

Mr Samaras' expected plan to request a two-year extension on its austerity programme has provoked frustration among other European politicians with Athens.

"There's a process we're engaged in to evaluate the efforts made by Greece in recent months, which we know was set back by elections," European Affairs Minister Bernard Cazeneuve said on France's Europe 1 radio. "We'll evaluate the situation and try to take a common position."

"It's important to let the Greeks express their request clearly, to let the Troika report and then to hold discussions between European countries to find the right position," he added. "We want countries to meet their commitments and we want the European Union to create conditions that will generate growth."

In an interview with Deutschlandfunk radio, Germany's deputy finance minister, Steffen Kampeter, said: "It is important that both sides should keep to what we agreed. We will decide in an orderly, fair and transparent procedure in Europe. The key to this lies not in Berlin, but in Athens."

Alexander Stubb, Finland's minister for European affairs and foreign trade, took a tougher stance, telling reporters: "There will be no third (aid) package if it [Greece] does not make structural reforms,"

Greece's difficulty in honouring its commitments have stirred fresh speculation over its exit from the euro.

On Saturday, German Finance Minister Wolfgang Schaeuble said: "I have always said that we can help the Greeks, but we cannot responsibly throw money into a bottomless pit."

Joerg Asmussen, a German member of the ECB's executive board said that a Greek exit would be "manageable", albeit expensive, and would result in higher unemployment.

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