German Chancellor Angela Merkel has expressed optimism that heavily-indebted Greece will receive the next tranche of financial rescue funds from the European Union and the International Monetary Fund (IMF) to avert a debt default next month.

She assured visiting Greek Prime Minister Georgios Papandreou of Germany’s “full support” for his country to come out of its persisting debt crisis successfully and remain a part of the euro zone.

“We want a strong Greece in the euro zone and we will do everything necessary to help Greece overcome the crisis,” she told a news conference after a meeting with Mr. Papandreou on Tuesday evening.

Ms. Merkel said it is a positive sign that the “troika” of the EU, IMF and European Central Bank is returning to Athens on Thursday to verify the progress made by Greece in implementing agreed reforms in return for a 110 billion euro bailout fund offered by the EU and IMF in May last year.

She demanded that the Greek government fulfill its commitment to get a favourable report from the team of experts.

As far as the German government is concerned, all decisions on future assistance for Greece will be based on the reports of the “troika” of experts, she said.

Greece will receive the next tranche of 8 billion euros if the experts give a favourable recommendation.

The Greek government had warned that it will become insolvent if the latest instalment of bailout funds is not released by the middle of October.

Meanwhile, the Greek Parliament in Athens on Tuesday passed a highly unpopular property tax, one of the conditions set by the EU and the IMF for the release of the next tranche, as thousands of people demonstrated outside in protest against the government’s latest austerity measure.

Chancellor Merkel emphasised Germany’s solidarity with Greece and said the two nations are closely linked by their common currency.

“The weakness of one partner is a weakness of all,” she said.

The meeting between the two leaders came two days before a crucial German parliamentary vote on expanding the euro zone’s financial rescue fund, the European Financial Stability Facility (EFSF), and giving it new powers to safeguard the stability of the euro area.

These proposals were agreed to by EU heads of state and government at their summit in Brussels on July 21.

Ms. Merkel expressed confidence that an upward revision in the size of the EFSF would be passed by the Bundestag, in which her Centre-Right coalition has a majority, on Thursday, even though a group of “rebel” coalition MPs have threatened to vote against it.

Mr. Papandreou reaffirmed his government’s determination to press ahead with reforms in spite of mounting public protests and to fulfil all the conditions agreed with EU partners and the IMF.

Greece is determined to fulfil its commitments and to fully implement austerity measures to overcome the debt crisis and to restore competitiveness of the economy, he told the news conference.

He thanked Greece’s euro zone partners for their support and said the Greek people are making enormous sacrifices to take the country out of its present crisis and “it is important that they get signals of support from their European partners”.

Earlier, Mr. Papandreou sought the support of the German industry for his government’s reforms and for enhancing economic efficiency by stepping up their investments in his country.

“I can guarantee that Greece will fulfil all its commitments,” he told the annual conference of the Federation of German Industries (BDI) in Berlin.

“I can promise you that Greece will fight back to the path of growth and prosperity after this painful period,” he said.

Mr. Papandreou pointed out that Greece made “remarkable progress” since it began implementing the reforms demanded by the EU and the IMF in return for the first financial rescue package of 110 billion euros pledged in May, 2010.

The Greek government succeeded in substantially reducing its budgetary deficit last year.

His government’s goal is to achieve a budgetary surplus next year by implementing the most comprehensive structural reforms in the country’s history, he said.

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