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Greece could miss New Year's end-of-bailout celebration

The Greek government's budget row with the "Troika" of organizations checking it's sticking to the rules of its massive bailout could mean that the last tranche of 1.8 billion euros ($2.2 billion) of aid could be delayed further, as the program's fifth and final review is not completed yet.

As European finance ministers gather in Brussels Monday to discuss Greece, a plan to negotiate a credit line for the country, which would give it a financial backstop after exiting the program, also seems further away.


A demonstrator in front of the Greek parliament on December 7, 2014
George Panagakis | Pacific Press/LightRocket | Getty Images
A demonstrator in front of the Greek parliament on December 7, 2014

All this makes the political headache for Greek Prime Minister Antonis Samaras, who was hoping to gain voter approval ahead of a presidential election in early 2015 and a possible snap election. The left-wing anti-bailout Syriza party could then come to power, throwing the program into chaos.

Read MoreStalled Greek bailout talks to resume in Paris

"It is not the first time that a review has been delayed and the last review of the year is always the most difficult. The government may also have been trying to limit the political cost of new measures ahead of what could be a pre-election period.", Thanos Vamvakidis, Head of European G10 FX Strategy at Bofa Merrill Lynch told CNBC.

Greece has received two bailouts worth a total of 240 billion euros ($295 billion) since 2010, when the country's dire financial situation was revealed threatening to throw the whole euro project off the cliff. These loans came in exchange for strict austerity measures and were overseen by the so-called Troika of international organizations – Greece's fellow euro countries, European Central Bank and the International Monetary Fund.

"We're going to listen to the Troika today to see where they stand, to see what progress has been made, what further commitments the Greek government has given. On that basis we will decide whether we can come to a conclusion before the year's end or there will have to be an extension," President of the Eurogroup Jeroen Dijsselbloem said on Monday. "It's still an open matter."

Greece came out of a six year recession this year. But the government hasn't had the time to celebrate its success, as the Troika disagreements and the election risk have sent Greek bond yields soaring again.

The European part of the second loan, worth 144.6 billion euros, is coming to an end, with only the IMF continuing to fund Greece through to the second quarter of 2016. But Greece's euro zone peers are afraid that a much larger funding gap for 2015 looms than the 338 million euros that the government is predicting in its budget plan for next year. The IMF would also need a guarantee that there is no budget deficit for the next twelve months before releasing another 3.5 billion euros due.

After a failed negotiation in Paris two weeks ago, the Troika has been pushing Greece for more fiscal and structural measures that would see the country save an extra 2.5 billion euros for 2015.

The Samaras government has already proposed a pension reform, a raise in the sales tax for hotels and hiking of income taxes to tame its lenders.

Read MoreGreek PM winsconfidence vote in parliament

The prime minister said earlier this week that the Troika's demands were unjustifiable and that the budget's estimates are correct.

The 2015 budget, which includes none of the new measures suggested, was voted last night in Parliament while angry protests raged outside the building. The budget predicts among others a primary surplus of 3 percent of GDP, as well as growth of 2.9 percent for 2015.

"At some point this political crisis will be over and it won't have been as important as we thought. The fundamentals of the Greek economy are really strong and when this period of political uncertainly is over, we will have an influx of capital and higher investor interest.", Michael Massourakis, Group Chief Economist at Alpha Bank told CNBC on the phone.

Read MoreEU leaders weigh plan for Greek exit

But some investors don't seem convinced. Anthony Doyle, head of fixed income investment specialists at M&G Investments, who manage £257 billion in assets, says they are staying away from Greek bonds.

"We don't like them. We think they're already priced in for ECB QE", Doyle told CNBC.

The President of the ECB Mario Draghi shied away from unveiling a plan for government bond purchases during a press conference last week in spite of market pressure.

The deputy Prime Minister Evangelos Venizelos said on Friday he is confident an agreement with the Troika will be reached before Christmas.

- By CNBC's Nefeli Agkyridou