A spokesman for the German government said Tuesday that the country is yet to decide on a potential emergency aid package to Greece, dismissing earlier reports that suggested euro-zone nations have already agreed in principle to such an aid package.
Government spokesman Ulrich Wilhelm was quoted as saying on Tuesday by Reuters that he "rejected the accounts from coalition sources that a decision over aid for Greece has practically been made," describing the reports that suggested so as "unfounded."
The German government spokesman's response came after a Reuters report cited an unnamed senior member of the German coalition as saying that euro zone countries had decided in principle to help Greece.
"The decision on help for Greece has been taken in principle within the Euro zone," the Reuters report quoted the source as saying earlier on Tuesday.
In addition to the Reuters report, the Financial Times Deutschland newspaper quoted Christian Democratic Union's deputy parliamentary leader Michael Meister as saying on Tuesday that Germany was considering an aid package for Greece. He told the paper that the package includes bilateral aid and other European Union-coordinated assistance measures.
"If Greece received help, then it would only be under strict conditions and if the Greek government fundamentally reforms the state. A stable euro is the top priority for conservatives." the paper quoted Michael Meister as saying.
The speculations about a possible EU aid to Greece were also fueled by remarks made by EU Economy Commissioner Joaqin Almunia while addressing the EU Parliament earlier in the day. In his address to the Parliament, Almunia urged lawmakers to help Greece tackle its economic crisis.
"I would like the leaders of Europe to say to the Greek authorities that in exchange for the efforts you are making, you are going to get support from us," Almunia told the European Parliament.
"You don't get support for free. That would simply lay the foundations for further imbalances and crisis. We have got instruments to provide that in exchange for clear commitments that they will meet their responsibilities," he added.
Almunia also told the Parliament that support from the International Monetary Fund was not required in assisting Greece in tackling the economic crisis, adding that the European Union can and should "do this by ourselves."
"If we have appropriate levels of coordination, if we've got political commitment, if we use the instruments that we have available ... we do have more than enough instruments to do what's needed," he added.
Almunia's remarks came days after IMF chief Dominique Strauss-Kahn indicated the global financial body's willingness to help Greece if assistance was requested. In an interview with a French radio station last Thursday, Strauss-Kahn said: "I have a mission on the ground to provide technical advice requested by the Greek government. And if we're asked to intervene, we will."
Last week, Almunia had announced the European Commission's plans to set up strict measures to monitor Greece's fiscal and economic policies aimed at reducing the nation's ballooning debt and massive deficits.
Almunia said the strict regime requires Greece to submit quarterly reports of the progress made in its fiscal and economic policies aimed at reducing debt and deficit, warning that the European Commission reserves the right to order more stringent measures on the Greek government if required.
Though Almunia said that the European commission backs Greece in its efforts to reduce its massive debt and deficit, he warned that the Commission might demand that Greece make even tougher cutbacks to tackle the ongoing crisis.
He had also rejected the assistance of the International Monetary Fund in tackling Greece's economic crisis, stressing that the 16-member countries of the euro-zone could resolve the crisis without help from the global economic organization.
Currently, Greece's debt is at a staggering €300-billion, with its deficit rising to more than 12% of national output last year. With the deficit equal to 12.7% of GDP, Prime Minister George Papandreou's government has been under immense pressure from the European Union to take immediate steps to address the crisis, as all EU member states are required to keep their budget deficits to 3% of GDP or under.
In addition, several international ratings agencies have downgraded the country's credit rating, implying Greece to be a riskier place to invest because of the current financial crisis. The downgrading of its credit ratings has made it more difficult and expensive for Greece to borrow money.
In January this year, the Greek government announced a stability program, which it says will help the country in reducing its budget gap to 2.8 percent of GDP in 2012 from the current 12.7 percent. However, Greek workers unions are opposing the austerity plan, and have announced nation-wide strikes to protest against government's strict austerity measures.
Following Tuesday's reports about possible EU and German aid to Greece, the euro regained some of its losses made against the U.S. dollar in recent weeks over concerns on Greek, Portuguese and Spanish finances, and was at session's high of $1.38 versus the greenback.
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