Greece looked likely Tuesday to get the bailout funds it needs to avoid bankruptcy at an emergency European finance ministers meeting called to try and clinch the aid deal and heal a rift with the IMF over the debt-stricken country.
"Greece has delivered (on reform)," said Jean-Claude Juncker, who presides the Eurogroup of finance ministers from the 17 countries that use the single currency. "(There are thus) good chances of an agreement."
But the ministers and the International Monetary Fund (IMF) first needed to resolve their many differences in this latest show of European Union brinkmanship that looked set to continue long into the night.
A major bone of contention was whether to give Greece, where the economy has shrunk by one-fifth since the crisis broke and which faces a sixth year in recession, an extra two years to arrive at a point where it can raise its own funds.
Irish Finance Minister Michael Noonan said that if this were to happen, it would open up a "funding gap".
"The debate is how that would be filled," he told reporters as he arrived at the Brussels meeting.
Greece's debt burden is nearly 180 percent of gross domestic product (GDP) and expected to rise to 190 percent by 2014. That is about three times the EU's 60-percent limit and way beyond what the country can support, meaning it must be reduced one way or another.
Juncker wants the target of 120 percent of Greek debt-to-GDP ratio by 2020 pushed back to 2022.
IMF head Christine Lagarde, whose organisation along with the European Central Bank (ECB) and the EU form the troika overseeing the Greek bail-out, Lagarde opposes extending the deadline and has very publicly clashed with Juncker over the issue.
The IMF cannot extend more aid to countries if their debt level is classed as unsustainable.
But Lagarde was upbeat as she arrived at the Brussels meeting.
"We're going to work very constructively to see if we can find a solution to Greece," said the IMF chief, who cut short a trip to Asia to attend the gathering.
The options being bandied about to resolve the extension include recycling ECB profits on Greek bonds, lowering the interest rate Greece has to pay, and extending deadlines for repayment.
Greece has been waiting since June for an instalment of 31.2 billion euros ($40 billion) in aid, part of a 130-billion-euro financial assistance package initially granted early this year.
By the end of the year, Athens is also due to receive two more aid payments, worth 5.0 and 8.3 billion euros, in exchange for which it has pledged to implement a series of unpopular austerity budget measures.
Under the current bailout, private sector creditors agreed to write off 100 billion euros of Greek debt, and it has been suggested that official creditors should now do the same -- an option the EU and the ECB have ruled out.
The ECB meanwhile cannot accept a write-down because doing so would mean in effect that it was giving a government direct financing, which its rules forbid.
Under its bailout terms, Greece was supposed to reduce its public deficit -- the shortfall between government revenue and spending -- to the EU limit of 3.0 percent of GDP by 2014, but last week a delay to 2016 was agreed.
Olli Rehn, the EU's economic affairs chief, said he too hoped for "results" on Tuesday.
"It is essential that we will be able to clear the air of all uncertainty... that is still hanging over Greece and thus over the eurozone," he said.