Malta, together with the other eurozone member states were informally told by EU officials to prepare for the worst and have contingency plans in hand in case Greece quits the euro.

During an informal EU summit meeting in Brussels last night, which continued into the early hours of this morning until going to press, unofficial details were given of a meeting held before the summit in which EU officials suggested to member states to prepare for a possible Greek exit.

Although unlike many of the other eurozone member states, Malta is not heavily exposed to Greek debt, the country will still suffer economically in such an eventuality.

During the past two years, Malta granted €56 million in bilateral loans to Greece and guaranteed a further €56 million as part of the second bailout given to Athens through the European Financial Stability Facility (EFSF). Some or most of these loans might be lost if Greece decides to default.

Greece’s possible return to the Drachma will also initiate another economic storm in the eurozone which could spread to other member states such as Spain and Italy. This will possibly plunge the EU’s economy into a deep recession.

Although yesterday’s informal summit meeting had officially to discuss growth, in preparation for an official summit at the end of June in which EU leaders are expected to sign a new growth pact, Greece was the main item on the leaders’ dinner table. Prime Minister Lawrence Gonzi, who arrived in Brussels in the afternoon, did not give any comments on his arrival and stayed inside the meeting room throughout the talks.

Despite the doom and gloom on Greece, officially the EU institutions and member states are putting up a brave face denying the Greece will exit the euro area. The Greek government yesterday also denied the persistent rumors.

Both Germany’s Angela Merkel and France’s new president Francois Hollande said that they will keep supporting Greece and want the country to remain in the Euro area. However, they both warned that this will only be possible if Greece honours its commitments on the bailout deals signed with the EU and the IMF and keep holding to the severe austerity measures until the Greek economy can stand up on its two feet once again.

At the same time, the summit was also dominated by long-standing differences between Germany and France on whether the eurozone should introduce Eurobonds – a measure mutualising the Eurozone’s debt – which will mean lower borrowing costs for member states.

Despite Mr Hollande’s pressure on Germany to give in to this idea, Germany’s Chancellor was reported as keeping to its strong position against Eurobonds even though she conceded that this might eventually have to be introduced in case of a Greek default.

Malta, together with the majority of member states, agrees with the concept of Eurobonds.

In June, the EU is expected to come up with a series of measures to boost Growth in the EU.

These include the introduction of ‘project bonds’ backed by the EU budget to finance infrastructure projects alongside private sector investment, the doubling of the paid-in capital of the European Investment Bank, the EU’s co-financing arm, to a little over €20 billion a re-direction of structural funds which tend to flow to poorer countries, to other areas where they might reap more immediate growth rewards.

However, before the next summit, all eyes will be on fresh Greek elections scheduled for June 17.