17 Sep 2011

Next Greek loan payment decision delayed

7:27 am on 17 September 2011

European Union finance ministers meeting in Poland have delayed a decision on the payment of the second instalment of a bailout loan to Greece until October.

Without the extra funding of 8 billion euros ($US11 billion), observers say Athens will default on its debt.

Eurozone, European Central Bank officials and International Monetary Fund representatives, have been visiting Greece on a regular basis to check on the process of government spending cuts before the next tranches of 110 billion worth of loans agreed in May 2010 are released.

Eurogroup chief Jean-Claude Juncker said Greece was making "significant" progress on budget reforms.

The BBC reports a decision is now expected to be made at a meeting of finance ministers in early October, with the funds released about 15 October.

Demands that Greece accelerate its austerity plans and political divisions over support for indebted eurozone members, have sparked turmoil in the financial markets.

Greek finance minister Evangelos Venizelos earlier said Athens would meet its austerity plan and default was not an issue.

''The intention is to meet the fiscal targets for this year and next year without delay, without exception and deviations,'' he said on arriving in Poland.

But a BBC correspondent said eurozone leaders remain as divided as ever over whether Greece has done enough to deserve further funds.