Brussels officials say deal to release latest rescue funds may not be agreed at meeting of eurozone finance ministers
Greece faces a week of tense brinkmanship with its international paymasters after officials in Brussels conceded that a long-awaited deal to release €31.5bn of bailout cash is unlikely to be finalised on Monday.
Athens is due to repay €5bn-worth of debts next week, and had hoped to unlock the latest tranche of rescue funds at Monday's meeting of eurozone finance ministers.
But privately senior officials in Brussels say that the Europeans and the IMF are in deep dispute about Greece.
Monday's meeting, postponed from this week, had been expected to sign off on the payout delayed since the summer, after the Greek parliament's adoption of a controversial new austerity package at the behest of its creditors. The parliament is also expected to pass a new budget on Sunday.
But the Brussels official said: "One round of discussions may not suffice to come to a final decision on the whole package. I am not pretending we'll come to a result and a solution on this."
The long-awaited report on Greece from the "troika" of the International Monetary Fund, ECB and European commission officials is expected this weekend.
It will report on Athens's compliance with the bailout terms and also include a "debt sustainability analysis" which is the main sticking point and the focus of the row between the IMF and the Europeans.
At IMF insistence, the bailout terms stipulate that Greek national debt may be no higher than 120% of gross domestic product by 2020 to qualify for the verdict of being "sustainable". The troika report is certain to state that this goal is unachievable.
Janet Henry, European economist at HSBC, said: "When the IMF agrees to provide financing for a country [it is providing €28bn of the second Greek package], it is on the understanding that the debt burden is sustainable. This is difficult to argue in the case of Greece given that the debt stock is now expected to exceed 190% of GDP by 2014".
There is broad agreement among Greece's creditors that as a result, the bailout regime will have to be extended by two years to 2016, generating a financing gap of up to €30bn. But there is no deal on how to fill that hole, and Henry, of HSBC, said a decision could take weeks. The ECB has rejected the idea of making a contribution by accepting a haircut on its holdings of Greek bonds.
Renewed uncertainty about Greece's finances came as reports suggested the German finance minister, Wolfgang Schaüble, had asked his experts to assess the risks for the French economy.
The Reuters news agency suggested Schaüble had instructed his panel of "wise men", who provide economic advice, to examine the prospects for a slowdown in France, and the potential knock-on impact on Germany.
Europe's leaders are also keenly awaiting a decision from Spain to request an official bailout, which would allow the ECB president Mario Draghi to unleash his latest weapon of "outright monetary transactions", buying Spanish bonds to bring down Madrid's borrowing costs. However, Spain's bond yields have remained safely below the 6% level that many analysts regard as unsustainable.
Reports also emerged in Italy that a full EU summit, due to take place on 22 and 23 November to discuss the EU budget, could be postponed, as David Cameron has made clear that Britain is not willing to accept the proposal that is currently on the table.
The prime minister lost an embarrassing Commons vote over the size of the EU budget last week, with Tory backbenchers uniting with Labour to reject his proposal of a spending freeze.
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