Europe Economy

Greek Finance Minister: Troika deal still possible

Greek finance minister: No more austerity

Greek Finance Minister Yannis Stournaras told CNBC he was still hopeful that Greece would receive its next 1 billion euro ($1.37 billion) installment of aid despite speculation that talks with Greece's creditors had faltered.

Troika inspectors returned to Athens on Tuesday to assess the country's reform progress, amid ongoing squabbles over its reform agenda.

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"We continue discussions with the aim to achieve an agreement as soon as possible...The milestone seems to be okay so we expect the disbursement of installment by the end of the year," said Stournaras.

This far, the Greek government has received 240 billion euros in international loans, attached to strict austerity and reform requirements. But the Troika has been reluctant to hand over the latest installment of aid, dissatisfied that Greece is yet to deliver on all of the milestones it was expected to achieve.

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Stournaras reiterated his view to CNBC on Monday that Greece would not be pushing through anymore austerity cuts. The Troika has been pressuring Greece to push through further cuts in order to secure its next tranche of aid.

"I have explained the social limits of austerity measures and this is why we don't want to take further austerity measures," he said. "I think you heard the President of the Euro Group referring to this and actually the Troika is coming back, so we can work together towards a solution."

Greece's economy has shown signs of a tentative recovery in recent times. Over the weekend Greece's parliament approved a budget plan that should see the debt-laden country emerge from a six-year recession in 2014, generating 0.6 percent of growth.

The nation has moved into a budget primary surplus of 812 million euros for 2013, the first surplus in a decade, and one of the conditions that the Troika has asked for in exchange for debt relief.

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Yannis Stournaras, Greece's finance minister, gestures during a news conference in Athens, Greece.
Bloomberg | Getty Images

Stournaras told CNBC that he was positive on Greece's economic progress and believed the country would regain market access, which describes the openness of a country's markets to foreign goods and services, in 2014.

"I'm very optimistic about next year. We're going to have positive growth so we can have... limited [market] access next year, but it will be the first time since 2010 so it will be very important," he added.

He was also positive on Greece's projected closing of its fiscal gap - which is the difference between the value of a government's projected financial obligations and its projected future tax - another area of contention with the Troika members. Greece currently estimates the gap at 500 million euros, but the Troika sees the shortfall as closer to 2 billion euros.

"We have a very big output gap, this gap closing slowly. This closing generates growth and driving forces next year will be investment and exports," he said.

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One potential hurdle for Greece's tentative recovery will be the strength of the , however, Stournaras told CNBC.

A stronger euro could hurt Greece, as the majority of demand for Greek exports comes from the euro zone, and a stronger currency could damp appetite for Greek goods, hindering its recovery.

"I'm concerned about the strength of the euro" said Stournaras. "For Greece, most of the exports are towards the euro area so I'm concerned...for the competitiveness of the euro zone," he added.

By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie

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