The eurogroup Finance Ministers are expected to approve in principle the 5th instalment of the 110 billion euro EU-IMF 110 billion euro bailout loan to Greece at their meeting in Luxembourg on Sunday.
According to European diplomatic sources, approval of the 5th tranche was made possible following the "green light" from the IMF, which accepted that an agreement in-principal by the eurogroup for additional help to Greece would be sufficient for approval of the instalment.
Further, the same sources pointed out two important matters concerning the issue of Greece. The first is that even after the recent meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy, great divisions remain regarding private sector involvement in a new rescue package for Greece. The second is that these talks could take time - even beyond September - in which case Greece would be running out of cash and dangerously approaching a default.
"The discussion now is evolving into Greece being a systemic risk - and it is", said a eurozone source with knowledge of what is going on in Brussels. "In this sense, it is vital that Greece understands that this is its last chance to conform with what is required, by adopting the Medium-Term programme and implementing it immediately," he added.
Eurozone ministers are awaiting Sunday's meeting with heightened interest, as it will be new Greek finance minister Evangelos Venizelos' first participation in the eurogroup since his assumption of the finance ministry on Friday after a broad government reshuffle in Greece, replacing George Papaconstantinou after 20 months in the crucial ministry, and his European counterparts are looking forward to hearing the new minister's positions.