THE PROBLEM IS not the euro, according to German chancellor Angela Merkel, who insists that the single currency is a stable one but that some countries need to improve their competitiveness and fiscal responsibility.

Speaking on a trip to Singapore, Merkel said that the problem was not with the “stable currency” but that the eurozone region had a “competition problem, a competitiveness problem,” reports AFP.

This was an apparent reference to eurozone members with debt problems such as Ireland and Greece. She added that the eurozone needed to put “fiscal responsibility and fiscal soundness at the very heart of our efforts.”

Her comments came amid widespread speculation and even expectation that Greece is in line for a second bailout.

A report from the so-called troika of the European Union, International Monetary Fund and the European Central Bank due this weekend is expected to outline the full extent of Greece’s financial situation, according to the Wall Street Journal.

It is reported that Greece, despite the negative outlook, is close to securing the next €12 billion tranche of loans that it is due to draw down under its €110 billion bailout deal.

Separately, Merkel has also backed current French finance minister Christine Lagarde to become the new head of the IMF although the German leader added that long-term the lender should drop the custom of always choosing a European as a managing director.

Lagarde is the clear favourite to replace her compatriot Dominique Strauss-Kahn when the IMF makes its decision later this month.