HispanicBusiness

Eurozone finance ministers seemed to have prepared the way for a new deal with Greece as they praised Athens for progress in implementing the terms of its bailout agreement at an informal meeting in Cyprus on Friday.

"We have been encouraged by the progress achieved by the Greek government and we have high hopes that the target will be reached," said Eurogroup President Jean-Claude Juncker at a press conference after the meeting.

This was echoed by International Monetary Fund (IMF) chief Christine Lagarde who said "it seems to us quite clear that Greece has already produced a huge effort, but it will have to continue to do so."

The Greek government is locked in tough negotiations with technocrats from the troika -- the European Commission, the European Central Bank and the IMF -- on a revision of its 130 billion euros (170 billion U.S. dollars) bailout program with a view of securing the release of a 31 billion euros tranche in October.

Greece is fighting to lengthen the time span in which to implement tough terms of the bailout program. Greek Finance Minister Ioannis Stournaras said after the Eurogroup session that the time factor seemed to be on the table, but he did not envisage an agreement before the second half of October.

"We are on the right track, though we do not agree on all aspects. We will try to finish everything by the end of October," Stournaras said.

Juncker also said that a report on progress in the troika negotiations with Greece is expected within the first week of October, but a final Eurogroup decision will not be in place before the second half of the month.

Juncker also categorically denied Greece would quit the eurozone. After discussing the situation in Spain, Juncker said he expected Portugal to return to the markets next year and also praised Ireland as proof that bailout programs are delivering results.

Host country Cyprus, the fifth Eurogroup country to apply for bailout, informed other eurozone countries on its efforts to draw up an austerity program in exchange for financial support by the European Union (EU) and the IMF to help it recapitalize its banking system, battered by its exposure to Greek debt.

The Cypriot government is insisting that the need to recapitalize its two major banks is the only reason it has applied for bailout, but EU Commission officials have stressed that its economy needs to be radically restructured.

Cyprus President Dimitris Christofias is reportedly seeking a 5 billion euro loan from Russia. Eurogroup countries do not object to a bilateral loan but are insisting on a speedy implementation of an economic consolidation program.

Cyprus may only need between 10 to 15 billion euros to meet its immediate financial obligations, a small amount for European institutions and the IMF, but a huge burden on the island with a GDP of 17 billion euros.