Greece will get another tranche of bail-out funds: Merkel

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 George Papandreou of Germany's "full support" for his country to come out of its persisting debt crisis successfully and remain a part of the Eurozone.

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

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 installment 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 Eurozone'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.

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.