Merkel noted "mojor progress" in cutting Greece's debt, adding that she has "full confidence in the Greek government and its prime minister", media reported. (Agencies)
But she also warned that negotiations between Greece and international lenders on more aid will not be an easy job.
The chief auditors of international creditors left Greece on Thursday and are to return by mid-December to continue negotiations. According to Greek government sources, the two sides have still not agreed on the extent of the 2014 fiscal gap.
Creditors are pushing for supplementary tough measures to ensure that timetables will be met, before disbursing more rescue loans to Greece and discuss a further debt relief.
Greek Prime Minister Antonis Samaras said after meeting Merkel that the worst of the debt crisis was over and promised more efforts to make Greece's economy more competitive.
The Greek government submitted on Thursday the final 2014 budget draft predicting return to growth by a 0.6-percent Gross Domestic Product (GDP) rate in 2014, after six years of deep recession.
The debt-laden country is kept afloat with multi-billion-euro bailout funding under deals signed since May 2010 in return of a painful austerity and reform programme.
In Germany, coalition talks between the Social Democrats (SPD) and Merkel's conservatives have entered the final phase on forming a "grand coalition" to rule Europe's largest economy for the next four years.
On handling the eurozone debt crisis, the SPD called for more solidarity measures for indebted eurozone members including Greece. In contrast, Merkel insisted on structural reforms and spending cuts by indebted countries and has said it is her responsibility as chancellor to keep the reform pressure on Greece.
Merkel noted "mojor progress" in cutting Greece's debt, adding that she has "full confidence in the Greek government and its prime minister", media reported.