The eurozone has begun preparing a third bailout package for Greece of up to €20bn on top of existing loans totalling €240bn.
The new bailout, which will be decided in April, was discussed at a eurozone meeting last week and a German finance ministry paper leaked to Der Spiegel estimates Greece needs between €10-20bn to service its debts.
Wolfgang Schaeuble, the German finance minister, has admitted that new loans will be necessary for Greece as doubts continue over the sustainability of the country’s high levels of debt.
“What is sure is that any further aid would be much less expansive than help so far,” he told the German finance magazine Wirtschaftswoche.
The shortfall in Greek financing when the current bailout package ends in December has been put at €15bn as Greece struggles with a debt level of 176pc of GDP.
Last July, the International Monetary Fund warned that Greece could face a new debt crisis even earlier, under the current loans, with a separate €10.9bn black hole opening in its finances over the summer, taking the cost of the third bailout over €20bn.
Germany will press the fragile ruling coalition in Greece to speed up unpopular austerity measures and economic reforms and the finance ministry paper claims that only half of the agreed measures have been implemented so far.
The German government has insisted, especially during elections last year, that the eurozone will not heed IMF calls for a second Greek debt restructuring deal because of the cost to taxpayers in creditor countries such as Greece.
Despite optimism over growth, which is forecast to be +0.6pc this year and meeting a eurozone demand to produce a primary budget surplus this spring, the devastated Greek economy can carry the country’s current high levels of debt.
With 28pc unemployment, rising to almost 60pc among the young, many believe the Greek government has reached the limit of what eurozone austerity measures can impose on its people.
The IMF has called on the eurozone to write off debts to allow Greece to reduce its debts by 66pc to below 110pc of GDP by 2021.
Germany’s refusal to write off debt and continued insistence on a stepped austerity drive has stalled talks between Greece and the “troika” of creditors, the IMF, European Central Bank and European Commission.
The issue of “debt sustainability”, the simple question of whether Greece can pay back its debts, has been identified as a major problem by the IMF at a time of an “acute risk” of political turmoil.