Germany says no to Greek loan extension request

Germany has rejected Greece’s proposal for an extension of its loans, saying that it fell short of the conditions expected by the rest of the eurozone.

The shock announcement from Berlin came just hours after Greece filed a formal request to its eurozone partners to extend its loan agreement, in the hope of averting a cash crisis.

Eurozone ministers are due to meet on Friday in an attempt to hammer out a deal. It will be their third attempt in 10 days to resolve a standoff that has sent jitters across the continent at the prospect of a messy Greek exit from the single currency.

The European commission had described the Greek proposal – widely seen as a climbdown on some of Greece’s key demands – as a positive sign that could pave the way for compromise.

But Germany said the Greek plan failed to meet eurozone ministers’ demands that Greece stick to its bailout programme – a set of demands laid out on Monday at an acrimonious meeting in Brussels that failed to end the deadlock.

“The letter from Athens is not a proposal that leads to a substantial solution,” finance ministry spokesman Martin 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 does not meet the criteria agreed by the Eurogroup on Monday.”

A Greek government official said its latest proposal included measures to deal with the country’s “humanitarian crisis” and kickstart the economy. The request for a six-month loan extension would give Greece room to negotiate a new deal for growth with its eurozone partners, the official said.

But the request was seen as a climbdown by the Greek government to the demands of its eurozone creditors.

In a letter to Jeroen Dijsselbloem, president of the eurozone finance ministers’ group, obtained by Reuters, Greece’s finance minister, Yanis Varoufakis, conceded that the Greek authorities would “refrain from unilateral action that would undermine the fiscal targets, economic recovery and financial stability”.