Euro zone finance ministers meet in Luxembourg today amid increasing uncertainty over the status of Greece’s bailout after the Greek government won a vote of confidence on Friday.
With the EU portion of Greece’s second bailout due to expire at the end of the year, the government in Athens has publicly stated that it intends to return to the markets next year, forgoing the remaining chunk of IMF loans that are scheduled to run into 2016.
However its lenders are dubious of Greece’s ability to return to private market funding despite the country raising some debt on private markets this year and experiencing a slight upturn in economic performance.
Greek prime minister Antonis Samaras comfortably won a vote confidence on Friday, a signal that he has political support for his move to effectively exit the bailout early.
Forced loan
“Greece doesn’t need another bailout programme or another forced loan,” Mr Samaras told the parliament on Friday.
While there had been speculation that the European lenders could be preparing a “third bailout” for Greece to run alongside the €15 billion remaining under the IMF programme, the Greek government is now preparing to enter talks with its lenders ahead of elections next year.
Early bailout exit
While euro group president
Jeroen Dijsselbloem
said in Washington on Friday that Greece’s debt was sustainable, noting that the country’s performance had exceeded expectations, the EU and IMF is wary of sanctioning an early bailout exit for Greece at a delicate time for the euro zone economy.
Today's meeting of euro zone finance ministers – Irish Minister for Finance Michael Noonan will not attend due to the budget – takes place two days before euro zone countries are due to submit their 2015 budget to the European Commission. France has already said it will miss its European Commission deficit target by a further two years, sparking fury from Brussels.
EU officials are understood to be pressing France and Italy for a commitment to further labour-market reforms ahead of this week’s deadline.
France and Italy have been pushing the European Commission to sanction further flexibility in the application of budget rules as they struggle to meet their deficit and debt targets respectively.
