Greek government to request extension in its loan agreement but not conditions

tsipras-baroufakisA Greek government spokesman confirmed this morning that Greece will today request an extension to its loan from the Eurozone. Reuters reported yesterday that, according to unnamed sources, Greece would seek a six month extension to the loan but not to the current program of conditions.

In an interview with ZDF, when asked specifically about such an option, German Finance Minister Wolfgang Schäuble said, “It’s not about extending a credit program but about whether this bailout program will be fulfilled, yes or no,” adding, “On 28 [February], at 24.00 hours, it’s over,” referring to the current program.

Kathimerini reports that, as part of the deal, the Greek government is willing to commit to a moratorium of any steps which would affect Greece’s fiscal targets and agree to not roll back reforms. However, in a speech to the Greek Parliament yesterday, Greek Prime Minister Alexis Tsipras unveiled a number of policy measures specifically aimed at undoing reforms taken under the bailout. These include reversing deregulation of the labour market, specifically allowing a return to collective wage bargaining. Tsipras also said he would not accept an “ultimatum” from Europe and was in “no rush” to find a deal. Separately, the Greek Finance Ministry has this morning released its full negotiating documents from the last Eurogroup meetings to the Greek media.

Meanwhile, the ECB will today review Greek banks access to the Emergency Liquidity Assistance (ELA) line. The ECB is expected to approve continued access. However, the crucial question will be whether it raises the limit again from €65bn given that deposit outflows have continued, putting Greek banks under more funding pressure.

Kathimerini also reports that the Greek government could face a funding crunch on 24 February, after data released yesterday showed the central administration has a slight net cash deficit. Open Europe’s Nina Schick appeared on Monocle 24 radio discussing the Greek developments, while Pieter Cleppe appeared on Euranet TV. CNN Money cites Open Europe’s estimates of Greek debt held by official institutions, and The Wall Street Journal’s Money Beat blog cites Open Europe’s assessment of where Greece might find agreement with the Eurozone on its economic plans. Writing in the Daily Telegraph, Open Europe’s Mats Persson argues Greek Finance Minister Yanis Varoufakis has “overplayed his hand and Greece will have to make a deal to stay in the Eurozone”.

Last modified onWednesday, 18 February 2015 10:55

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