Greek Prime Minister Antonis Samaras
Greek Prime Minister Antonis Samaras (Photo: Reuters)

Greek prime minister Antonis Samaras is to meet with Jean-Claude Juncker, the head of the Eurogroup of finance ministers, in a bid to to secure more time for the debt-ravaged country to push through a package of stringent austerity measures.

The European Union (EU) and International Monetary Fund (IMF) have provided Greece with two tranches of bailout funding worth €240bn (€190bn), on the condition that the country fulfils its pledge to deliver a series of public spending cuts.

Greece is now due for a fresh tranche of funding worth €31.5bn, but this will only be proffered if the Eurogroup ministers are satisfied that the country can fulfil its latest pledges - which include cutting public spending by €11.5bn over the next two years.

If Greece fails to receive the next round of bailout money, it could be forced to default on its debt and leave the Euro.

Breathing space

Samaras has also made his case to German newspaper Bild, saying that Greece needs "breathing space" if it is to fulfil its promises.

However, during the forthcoming meeting, Juncker is expected to tell Greece that it has to carry out the promised austerity measures in order to receive further bailout funds, and that there will be little leeway for concessions - despite Samaras's plea for a deadline extension.

Several German government officials have said that the country will not soften its demands on Greece, which has already been bailed out twice. Yet some German sources are now saying that concessions could be possible, as long as Samaras shows a willingness to meet the main targets set out in his country's bailout program.

It is thought that Greece's public spending cuts will need to be even greater than those recently promised. Given that the cuts will lead to thousands of job losses, which will in turn reduce tax revenues, experts claim the Greek government will actually have to make cuts worth €13.5bn.

Greece teeters on the brink of collapse after being in recession for four years and will need more money to stay afloat, despite pledging to push through €11.5bn of cuts over the next two years, tax rises, and labour market and pension reforms.

However, since the job losses, salary and pension cuts will lead to lower tax revenues, the Greek government will have to shore up €13.5bn in nominal savings to achieve its 11.5bn target.

Investment banks have already drawn up various contingency plans to cover a Greek exit from the euro, as the debt-stricken country has faced a long-running battle to hit its targets under the bailout agreement and is now entering its fifth year of recession.