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Eurozone ministers to discuss new funds for Greece Greece bailout extension 'to cost 32bn euros more'
(about 2 hours later)
Eurozone finance ministers are meeting in Brussels to discuss whether to release new funds to indebted Greece. A draft document prepared for eurozone finance ministers suggests that Greece should be given two more years to meet budget goals, but that this will add 32.6bn euros ($41.4bn) to its bailout.
Athens hopes it has done enough to secure the next instalment of bailout money, after passing a budget for 2013 which involves large spending cuts, Eurozone finance ministers are meeting in Brussels to discuss new targets for Greece based on the report.
Eurogroup chief Jean-Claude Juncker says there will be "no definitive decision" on Monday on the funds. They will also discuss whether to release the latest tranche of funds but a decision is not expected on Monday.
Greek PM Antonis Samaras earlier warned that without the new loan, the country would run out of money within days. Greece is pushing for the funds after passing a tough budget for 2013.
Mr Juncker has also responded to a long-awaited report on the pace of Greek reform by its three international creditors - the European Commission, the IMF and the European Central Bank - or the so-called "troika". Greek PM Antonis Samaras has warned that without the new tranche of 31.5bn euros the country will run out of money within days.
'Smoother path'
The draft document on the pace of Greek economic reform was prepared by the so-called "troika" - the International Monetary Fund, the European Central Bank and the European Commission.
The troika has already pledged 240bn euros in bailout loans to Greece.
The two-year extension would give Greece time to achieve a primary budget surplus - a figure that would not include debt-financing costs.
The document says: "Our revised fiscal programme targets the 4.5% of GDP primary surplus target by 2016, two years later than foreseen.
It adds: "The smoother path will help to moderate the impact of fiscal adjustment on the economy."
The extension would cost an additional 32.6bn euros and comes with "very large" risks, the report says.
Those risks include the uncertain political support for the programme within Greece, the possible negative effect on the economy of the fiscal consolidation and possible court challenges to the measures.
The BBC's Chris Morris in Brussels says the original intention was for debt to be reduced to 120% of GDP by 2020 but that this is no longer feasible and a new target needs to be agreed by everyone.
He says this means more uncertainty, at a time when many Greek citizens believe they have taken all the austerity they can swallow.
Market fund-raising
Eurogroup chief Jean-Claude Juncker had earlier expressed optimism about the troika report.
"The basis is positive, because the Greeks have really delivered," he said."The basis is positive, because the Greeks have really delivered," he said.
The eurozone finance ministers will have to decide whether to give Greece an extra two years - to 2016 - to meet its budgetary goals.
Meanwhile, German Chancellor Angela Merkel is visiting Portugal, where she expressed solidarity with the country as it tackles an economic crisis that has required a 78bn-euro ($101bn) international bailout.
'Key condition'
Many in Greece will feel that they have given all they can - and that Europe must now stick to its side of the bargain and provide the rescue funds that this debt-stricken country so desperately needs, says the BBC's Mark Lowen in Athens.
It has been a gruelling few days for the Greek government: hugely unpopular cuts squeezed through parliament; its majority reduced after rebel MPs were ousted; and yet more violent protests.
Greece had hoped its reward would be bailout funds. But Brussels says Athens must wait for an agreement on how to deal with the Greek debt level, how to stop throwing good money after bad.
The prime minister had warned that Greece's coffers would empty on Friday. Now interim financing seems likely until the funds are released. But bankruptcy still hovers on the horizon. And if the bailout cash is not secured soon, it will reinforce the feeling in Greece that the painful cuts are in vain and that Europe is not sticking to its side of the bargain.
That would make the government's position even more fragile - and lead any remaining confidence here to fade fast.
Greek MPs approved the 2013 budget, which includes further cuts to pensions and wages, in a vote on Sunday night.Greek MPs approved the 2013 budget, which includes further cuts to pensions and wages, in a vote on Sunday night.
The European Commission welcomed the approval.
Spokesman Simon O'Connor said: "We'll still need to analyse in detail the final version of the bill. Nonetheless, it very clearly meets another key condition for moving closer to a disbursement of the next tranche of financial assistance for Greece."
More than 10,000 people joined demonstrations outside Greece's parliament to protest against the cuts.More than 10,000 people joined demonstrations outside Greece's parliament to protest against the cuts.
The budget was a pre-condition for Athens to be granted a 31.5bn euro (£25bn; $40bn) EU/IMF loan necessary to stave off bankruptcy. The passing of the budget was a pre-condition for Athens to be granted the next tranche of 31.5bn euros of EU/IMF loans necessary to stave off bankruptcy.
Greece faces a repayment deadline for 5bn euros of debt on Friday.Greece faces a repayment deadline for 5bn euros of debt on Friday.
However, German Finance Minister Wolfgang Schaeuble has indicated it is unlikely that the eurozone ministers will decide on the disbursement at Monday's meeting. However, German Finance Minister Wolfgang Schaeuble said it was unlikely the eurozone ministers would decide on the disbursement of the tranche at Monday's meeting.
The funding will have to be approved first by some parliaments, including Germany's.The funding will have to be approved first by some parliaments, including Germany's.
"We all... want to help Greece, but we won't be put under pressure," Mr Schaeuble told the weekly newspaper Welt am Sonntag."We all... want to help Greece, but we won't be put under pressure," Mr Schaeuble told the weekly newspaper Welt am Sonntag.
A draft of the "troika" report on Greek reform, seen by news agencies, suggests that if a decision is made to extend Greece's bailout plan to 2016, it will cost another 17.6bn euros. On Tuesday, Greece will href="http://www.bbc.co.uk/news/business-20272997" title="link to news article" >make an urgent bid to raise funds from the financial markets in case it does not get the tranche of bailout money.
On Tuesday, Greece is to make an urgent bid to raise funds from the financial markets in case it does not get the tranche of bailout money.
The budget - which contained many austerity measures which had already been passed by parliament - foresees a deepening of the worst recession of any country in modern history, our correspondent says.
The national economy is expected to shrink next year by 4.5% and public debt is likely to rise to 189% of GDP, almost double Greece's national output.The national economy is expected to shrink next year by 4.5% and public debt is likely to rise to 189% of GDP, almost double Greece's national output.
This year, public debt stood at 175%.This year, public debt stood at 175%.
The head of Syriza, a left-wing opposition party, said the budget cuts would leave Greeks unable to afford essential goods this winter.The head of Syriza, a left-wing opposition party, said the budget cuts would leave Greeks unable to afford essential goods this winter.
Meanwhile, Mrs Merkel was met by angry protesters in Portugal as she met its president and prime minister.
Banners reading "Portugal is not Merkel's country" and "Angela Merkel assassin" greeted her arrival at the presidential palace.
Later she held a press conference with Prime Minister Pedro Passos Coelho, saying she sensed a great determination within Portugal to overcome its crisis.
Mr Passos Coelho said the country's international bailout had been "the only way forward".