Eurozone Agrees on Four-Month Extension of Greece Bailout
Ministers agreed on extending bailout for Greece by four months, Austria’s finance minister said, under condition that Athens details adequate reforms
BRUSSELS—The eurozone approved a four-month extension on Greece’s bailout Friday, provided Athens submits by Monday details on the reform and budgetary measures it plans to take, Austria’s finance minister Hans Jörg Schelling said.
The four-month extension falls short of the six months Greece had requested Thursday and strengthens the hand of the country’s creditors in negotiations for a follow-up deal.
Greece has to submit a list of proposed measures by Monday, which will then assessed by the European Commission, the European Central Bank and the International Monetary Fund by April, Mr. Schelling said.
Finance ministers will hold conference call Tuesday night to discuss the Greek list of measures.
“This is not about winners and losers,” Mr. Schelling said.
A four-month extension would get Greece past loan repayments to the IMF this spring, but would cut off ahead of almost €7 billion in bonds held by the ECB coming due in July and August. The shorter extension would thus strengthen the negotiation position of Athens’s creditors for any follow-up aid deal.
The €240 billion ($273 billion) rescue deal from the eurozone and the IMF that has kept Greece afloat for almost five years is scheduled to expire at the end of the month. Greek officials have warned that the government risks running out of money in early March, especially if dwindling tax receipts fail to recover.
Jeroen Dijsselbloem, the Dutch finance minister who presides over the talks among his eurozone counterparts, said earlier Friday he had been ferrying between talks with the “key players” at the Brussels meeting, but stressed that the situation remained “very difficult.”
Pressure on Greek authorities to reach a deal with its creditors has been building amid deposit outflows from the country’s banks. The ECB already cut Greek banks off from its regular funding operations earlier this month, forcing them to rely on more-expensive liquidity from their own central bank.
At Friday’s meetings, eurozone finance ministers sought more details from Greece on what measures it is prepared to take in return for continued aid from the rest of the currency union.
Greece on Thursday asked for a six-month extension to its rescue deal, which is due to expire at the end of the month. Making that request was a step the new left-wing government of Prime Minister Alexis Tsipras, who soared to election victory on a promise to scrap the deeply unpopular agreement and some of its tough austerity measures, had resisted for weeks.
Without an extension—and a €7.2 billion aid installment that has been held up since September—the government in Athens risks running out of money within weeks, Greek officials have warned. That would leave it unable to finance public services and repay big loans slices to the IMF in the spring.
Greece and its eurozone creditors are poised for another round of tough negotiations over extending its bailout program, after Germany summarily rejected a request for an extension sent by Athens. Charles Forelle reports. Photo: Getty Images
As he arrived for the meeting with his eurozone counterparts in Brussels, Greek Finance Ministers Yanis Varoufakis said that with the request, his government had taken a big step toward meeting the demands of its creditors and that it was now time for the other side to budge.
“The Greek government has gone not the extra mile, [but] the extra 10 miles,” Mr. Varoufakis said. “Now we are expecting our partners to meet us not half way, but one-fifth of the way.”
Athens has been at odds with other countries, particularly Germany, which rejected the letter as far too vague. Several ministers complained that Greece’s proposal lacked detail on what measures mandated by its existing bailout program it is prepared to implement and what it was planning to offer in return for those it rejects.
Mr. Tsipras has ruled out further reductions to pensions for the poorest retirees and promised to reverse cuts to the minimum wage, arguing that maintaining the current course would plunge his country even further into crisis.
“There is some ambiguity in the letter and there is some contradiction between what is being said in Athens and what is in the letter,” said Michael Noonan, the Irish finance minister.
Greece has frustrated some ministers with what they say are mixed messages and brash claims about the way the existing bailout has worked. Several leaks of confidential documents to the press—sometimes before all ministers had even seen them—has also ruffled feathers.
Valdis Dombrovskis, a vice president of the European Commission who is in charge of the euro, said that the “changing rhetoric of Greek authorities has created a certain erosion of trust.”
The comments came after a meeting between German Chancellor Angela Merkel and French President François Hollande appeared to make little progress at breaking the impasse in the negotiations.
“We have to explain to other European countries what [the extension request] means and for that, there are many technical questions to be clarified,” Ms. Merkel said. “More work is needed and more decisions need to be made.”
Ms. Merkel said eurozone decision makers would continue to do “all we can” to keep Greece within the currency union, but stopped short of Mr. Hollande’s much more confident assurance on Athens’ membership.
“Greece is in the eurozone, it should remain in the eurozone,” Mr. Hollande said.
Wolfgang Schäuble, the German finance minister and one of the most ardent opponents of the antiausterity course taken by the new Greek government, said that the negotiations on Greece weren’t just about what Athens wanted.
“It’s not only about one country, it’s about Europe,” Mr. Schäuble said. “This revolves around whether we can trust each other,” he added.