Germany’s hardline finance minister Wolfgang Schaeuble on Sunday hailed a change in tone in talks with Greece over its next bailout but warned Europe would closely monitor the pace of reforms in Athens.
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The third bailout foresees a new round of painful austerity and reform measures in Greece.
In a nod to its calls for debt relief, Merkel said there was room to ease the burden on Greece by extending the maturities on its debt and reducing interest rates.
A finance ministry official said Friday: “We have repeatedly said that European treaties do not allow a haircut in the classic sense. on the outstanding nominal debt”.
International Monetary Fund chief Christine Lagarde said the bailout agreement is an important step forward for Greece, but more needs to be done, especially in providing debt relief to Athens.
Parliamentary approval is not in doubt because the Social Democrats (SPD) and Greens are expected to back the rescue but the vote could expose divisions in Merkel’s conservative ranks.
After debating through the night Thursday, the Greek parliament gave its backing to Tsipras’ plans to legislate what creditors want, though he had to rely on opposition votes after almost a third of his supporters rebelled, forcing him to consider a confidence vote that could pave the way for early elections.
It was opposed by 60 of the 311 legislators in Merkel’s bloc, seen as a blow to the popular chancellor on her 61st birthday.
The vote in the Bundestag is scheduled for 9 a.m. (0300 ET) on Wednesday, which means Merkel will likely have to push back her departure for Brazil on a government trip, which had been scheduled for 10 a.m.
An EU source reported that Merkel and Schaeuble, whose complex decade-long partnership in government is a source of fascination for Germany watchers, had “major differences” over the terms of the Greek rescue last week.
On August 20, Greece is due to make a 3.4-billion-euro ($3.8 billion) repayment to the European Central Bank (ECB), one of its major worldwide creditors.
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“The preparations have made good progress”, he told reporters ahead of a meeting of eurozone finance ministers in Brussels.
