Germany proposes Greece relinquish some fiscal powers, sources say

Germany is pushing for Greece to relinquish control over its budget policy to European institutions as part of discussions over a second rescue package, a European source told Reuters on Friday.

"There are internal discussions within the Euro group and proposals, one of which comes from Germany, on how to constructively treat country aid programs that are continuously off track, whether this can simply be ignored or whether we say that's enough,» the source said.

The source added that under the proposals European institutions already operating in Greece should be given «certain decision-making powers» over fiscal policy.

"This could be carried out even more stringently through external expertise,» the source said.

The German demands for greater control over Greek budget policy comes amid intense talks to finalize a second 130-billion euro rescue package for Greece, which has repeatedly failed to meet the fiscal targets set out for it by its international lenders.

It is likely to spark a strong reaction in Athens ahead of elections expected to take place in April.