Greece has struggled to meet the fiscal targets set out by its international lenders [Reuters]

Greece will not cede control over its budget to the European Union as has been proposed by Germany as a condition for a second bailout, Greek government sources have said.

"There is effectively a 'non-paper' that was presented to the Eurogroup," one of the sources said on Saturday, referring to reports that Germany had submitted a proposal to have the eurozone assume control over the Greek budget before it receives a new bailout.

"Greece will not discuss such a possibility," said the source. "It is out of the question that we would accept it, these are matters of national sovereignty."

Al Jazeera’s Andrew Simmons, reporting from Davos, said the possibility of the EU having any oversight of a member-state's buget has huge implications for the future of the European bloc.

"This [condition] caused outrage in Greece and consternation in EU in general. Basically, the EU would be taking over the budget and telling the Greeks what they can do and they can't do," Simmons said.

"What their saying in Greece point blank is: you can't do this," he added.

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Earlier, UK's Financial Times newspaper said it had obtained a copy of the proposal showing Germany wanted a new eurozone "budget commissioner" to have the power to veto budget decisions taken by the Greek government if they were not in line with targets set by international lenders.

"Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time," the document said.

Under the German plan, Greece would only be allowed to carry out normal state spending after servicing its debt, the Financial Times said.

"If a future [bail-out] tranche is not disbursed, Greece cannot threaten its lenders with a default, but will instead have to accept further cuts in primary expenditures as the only possible consequence of any non-disbursement," the newspaper quoted the document as saying.

Germany’s alleged proposal comes amid discussions to finalise a second $170bn rescue package for Greece, which has repeatedly failed to meet the fiscal targets set out for it by its international lenders.

Al Jazeera's John Psaropoulos, reporting from Athens, said the reaction of the Greek government was a dismissal of the proposal as a "non-issue".

"The government spokesman said the execution of the [national] budget is the exclusive right of the Greek government," Psaropoulos said.

Source: Al Jazeera and agencies