Greece poised for fresh aid as eurozone ministers meet

Greece appeared poised to win billions of euros in fresh aid as creditors signalled support for its reforms on Monday in a long-awaited audit completed as eurozone finance ministers gather for key talks.

The eurogroup ministers will decide if Greece has done enough to obtain 8.1 billion euros ($10.4 billion) in fresh aid.

They will also deal with the political crisis in Portugal, which has raised fears of fresh pressure on the 17-nation single currency bloc.

A statement from the lenders — the European Union, the European Central Bank and the International Monetary Fund — said the Greece audit had been concluded with a “staff-level agreement” from both sides that the outlook “remains broadly in line” with a reform programme.

The audit had been delayed by disputes.

The statement issued by the European Commission, the EU’s executive, also said that Greece looked to be on track to return to growth next year.

But it cautioned that reforms were “behind in some areas” and notably cited the need for Athens to take concrete steps “to gain control over health sector overspending”.

The report must still be referred up to the lending authorities, the IMF and the eurozone finance ministers.

“The macroeconomic outlook remains broadly in line with programme projections with prospects for a gradual return to growth in 2014,” it said.

The ministers gather for their last meeting before the summer break, with IMF chief Christine Lagarde also expected to attend.

On arriving at the meeting. which is scheduled to begin at 3:00 pm (1300 GMT), Eurogoup chief Jeroen Dijsselbloem, told reporters that “we will see if an instalment can be made soon and what the size of it will be.”

— Bonds fall due in August —

There has been suggestions that Greece could receive the next instalment of funds in a number of different instalments.

Greece needs to redeem bonds worth 6.6 billion euros by mid-August, and of the 8.1 billion euros of fresh aid to Greece, 6.3 billion euros are to be put up by the Europeans, the remainder by the IMF.

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.

Athens had pledged to axe 4,000 state jobs by the end of the year, as well as to redeploy 25,000 civil servants across its vast bureaucracy, including some 2,000 teachers Athens has proposed moving to other services.

“The so-called negotiations once again result in new measures for layoffs, school and hospital shutdowns, taxes and wage cuts,” Greece’s main opposition Syriza party said in a statement.

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 Dijsselbloem, have asked Lisbon to clarify the political situation quickly, fearing that 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.

But disagreements over the reforms sparked the latest crisis, with foreign minister Paulo Portas resigning 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 a deal this weekend to keep the shaky coalition together.

Under the accord, Portas would remain with a bigger role as deputy prime minister, tasked 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.