Juncker praises Greek austerity amid talks to disband troika

Speaking alongside Greek prime minister Antonia Samaras, Juncker praised Greek efforts to stabilise its economy with the budget-cutting measures having contributed to record-high unemployment and a sharp rise in poverty.

Greece’s unemployment rate at the onset of the financial crisis in May 2008 was 7.3 percent. It then shot up to a record high of 28 percent earlier this year with more than half of those under-25 without a job.

But Juncker warned that the crisis is not yet over.

“Many developments, events show us how fragile the situation is not only in Greece but elsewhere,” he said.

As former chair of the eurogroup of eurozone finance ministers, Juncker helped negotiate and supervise bailout packages for Greece, Ireland and Portugal.

The eurogroup is seen as a ‘fourth’ member of the so-called 'troika' of lenders - the European Commission, European Central Bank and International Monetary Fund.

In a report earlier this year, MEPs described the troika as an “ad-hoc” set-up with no clear legal basis and with no democratic scrutiny.

Representatives from the troika regularly go to bailed-out countries to assess how they are implementing reforms. Their reports form the basis for decisions on whether countries should get the next tranche of aid.

Troika set to be dismantled

But on Monday, Reuters reported that senior EU officials are now in early discussions on disbanding the troika and allowing Greece greater freedom to formulate and pursue its own policies.

"There would be no troika," an unnamed official told the news agency.

"There must be Greek ownership of reform. The Greeks have until October to come up with a programme, which would be decided by December for the start of 2015,” added the source.

Greece obtained two bailouts totalling €240 billion.

But the cash-strapped Greek government is still facing €320 billion in debt or the equivalent to 175 percent of its entire annual economic.

One idea, reports Reuters, is to award Greece some debt relief for every milestone achieved once it commits to a six-year plan of reform. The IMF would still supervise the country until 2016.

The troika would be scrapped in favour of a special European Commission taskforce. The taskforce would then check up on Greek reforms twice a year.

In case things go wrong, Greece would get a precautionary eurozone loan and tighter supervision.