JOIN USGreece seeks loan extension from EU
Greece formally requested a six-month extension to its eurozone loan agreement on Thursday, offering major concessions as it raced to avoid running out of cash within weeks, but immediately ran into strong objections from EU paymaster Germany.
Berlin’s reaction was hostile, with the finance ministry describing the Greek proposal as “not a substantial solution” as it failed to fulfill conditions of an EU/IMF bailout programme which leftist Prime Minister Alexis Tsipras had promised to ditch when he won an election last month.
With the programme due to expire in little more than a week, Athens urgently needs to secure a financial lifeline to keep the country afloat beyond late March.
Eurozone finance ministers will meet on Friday afternoon in Brussels to consider the request, the chairman of their Eurogroup, Jeroen Dijsselbloem, said in a tweet. That raised hopes of a deal to avert possible bankruptcy and a Greek exit from the 19-nation currency area.
But such hopes soon began to fade when the German Finance Ministry poured cold water on the Greek request made in a letter to Dijsselbloem for an extension to its
“Master Financial Assistance Facility Agreement” with the eurozone.
Berlin has led skeptical eurozone governments in demanding that Greece keeps promises made by a previous conservative-led government to implement tough austerity policies and painful economic forms. Finance Ministry spokesman Martin Jaeger repeated German objections to Greek plans to seek a “bridge” deal covering funding while sidestepping austerity issues.
“The letter from Athens is not a proposal that leads to a substantial solution,” Jaeger said in a statement. “In truth it goes in the direction of a bridge financing, without fulfilling the demands of the programme.”
The letter did not meet the criteria agreed by the Eurogroup of eurozone finance ministers on Monday, he added. In Athens, a government official said that Greece was proposing different terms from its current bailout obligations.
Humanitarian crisis
Greece had committed to maintain a fiscal balance during the interim period, take immediate reforms to fight tax evasion and corruption, and measures to deal with what Athens calls its “humanitarian crisis” and kick-start economic growth, he said.
In the document, Greece pledged to meet its financial obligations to all creditors, recognise the existing EU/IMF programme as the legally binding framework and refrain from unilateral action that would undermine the fiscal targets. Crucially, it accepted that the extension would be monitored by the European Commission, European Central Bank and IMF, a climbdown by Tsipras who had vowed to end cooperation with “troika” inspectors accused of inflicting deep economic and social damage on Greece.
However, the document stopped short of accepting that Greece should achieve this year a surplus on the primary budget — which excludes repayments on Greece's huge debts — equal to three percent of the country's annual economic output, as promised under the bailout deal.