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Greece bailout, Portugal crisis top agenda at eurozone talks

Finance ministers from the 17-nation eurozone are meeting Monday to decide if Greece has done enough to get a new slice of loans, and to deal with the political crisis in Portugal, which has raised fears of fresh pressure on the single currency bloc.

The ministers will gather in Brussels for their last meeting before the summer break. International Monetary Fund chief Christine Lagarde is also expected to attend.

Top on the agenda is a progress report drawn up by Greece’s so-called troika of international creditors — the European Union, the European Central Bank and the IMF — which will detail if Athens is indeed undertaking reforms pledged in exchange for rescue funds.

A positive report would lead to the release of the next tranche of aid worth 8.1 billion euros ($10.4 billion) to Greece, including 6.3 billion euros which are to be put up by the Europeans.

The funds are necessary as Greece needs to redeem bonds worth 6.6 billion euros by mid-August.

On Sunday, Greek officials said they were close to a deal with the three creditors over a new package of reforms required in exchange for the aid, including thousands of job cuts in the public sector.

The marathon talks moved from Athens to Brussels on Sunday, and are expected to go on to the last minute before the Eurogroup meeting is due to open.

Greek Finance Minister Yannis Stournaras said he was “optimistic that tomorrow (Monday) we will have an agreement”, according to the state-run Athens News Agency.

Athens had pledged to axe 4,000 state jobs by the end of the year, as well as redeploy 25,000 civil servants across its vast bureaucracy.

Eurogroup ministers are also due to discuss the situation in another bailed-out country — Portugal, which sunk into a political crisis over the shock resignations of two key ministers this month.

“Portugal respects all of its engagements and has not asked for anything,” said a European diplomat ahead of the meeting.

But European leaders, including Eurogroup chief and Dutch finance minister Jeroen Dijsselbloem, have asked Lisbon to clarify the political situation quickly, fearing that any uncertainty could throw the country off its course to exit the troika’s rescue programme by 2014.

Portugal’s doggedness in implementing required reforms has won praise from the international creditors but the painful austerity measures have been immensely unpopular at home.

It was disagreements over the reforms that sparked the latest crisis, as foreign minister Paulo Portas had resigned because he disagreed with Prime Minister Pedro Passos Coelho’s decision to hold fast to the path of austerity.

After a series of negotiations with Portas, Passos Coelho announced details of a deal on Saturday to keep the shaky coalition together.

Under the accord, Portas would stay in the coalition and have a bigger role. He becomes deputy prime minister and is in particular tasked with coordinating the country’s economic policies as well as relations with the country’s international creditors.

On Tuesday, the finance ministers from all 28 European Union countries are expected to give the final green light to Latvia to join the eurozone.

They would also have to set an exchange rate between the Latvian lats and the euro.