Greece to request extension to ‘loan agreement’, faces resistance from Germany
(Reuters) – Greece’s leftist-led government said it will submit a request to the euro zone on Thursday to extend a “loan agreement” for up to six months, raising prospects of a last-minute deal to keep the heavily indebted country afloat.
While European officials worked frantically with Athens to find a formula, EU paymaster Germany said no such deal was on offer and led the chorus of partners demanding that Athens must stick to the terms of its existing international bailout.
The move, confirmed by an Athens official, is an attempt by the new leftist-led government of Prime Minister Alexis Tsipras to keep a financial lifeline for an interim period while sidestepping tough austerity conditions in the EU/IMF program.
Whether finance ministers of the 19-nation currency bloc, who rejected such ideas at a meeting on Monday, accept the request as a basis to resume negotiations will depend on how it is formulated, an EU source said. The wording has to match EU legal texts to win approval in several euro zone parliaments.
Greece is burning through its cash reserves and could run out of money by the end of March without fresh funds, a person familiar with the figures said. He said Athens had enough to repay a 1.5 billion euro installment to the IMF next month but would struggle to pay public sector salaries and pensions in April.
Hardline German Finance Minister Wolfgang Schaeuble poured scorn on the Greek gambit, telling broadcaster ZDF on Tuesday evening: “It’s not about extending a credit program but about whether this bailout program will be fulfilled, yes or no.”
However, German Economy Minister Sigmar Gabriel, leader of the Social Democratic junior partners in conservative Chancellor Angela Merkel’s coalition, welcomed what he called the signal from the Greek government that it was ready to negotiate.
With the current bailout deal with the euro zone due to expire on Feb. 28, Tsipras said talks were at a crucial stage and his demands for an end to austerity were winning backing.
“There were protests across Europe supporting the moves made by Greece and we have managed for the first time through contacts with foreign leaders to create a positive stance on our requests,” he said at a meeting with President Karolos Papoulias.
