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 With its EU/IMF bailout program due to expire in little more than a
week, the government of leftist Prime Minister Alexis Tsipras
urgently needs to secure a financial lifeline to keep the country
afloat beyond late March.
Euro zone 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.
A government official told Reuters that Athens had asked for an
extension to its "Master Financial Assistance Facility Agreement"
with the euro zone. However, he insisted the government was
proposing different terms from its current bailout obligations.
Greece had committed to maintain 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 seen by Reuters, Greece pledged to meet its
financial obligations to all creditors, recognize the existing EU/IMF
program 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 International
Monetary Fund, a climbdown by Tsipras who had vowed to end
cooperation with "troika" inspectors accused of inflicting deep
economic and social damage on Greece.
The six month interim period would be used to negotiate a long-term
deal for recovery and growth incorporating further debt relief
measures promised by the Eurogroup in 2012.
Euro zone partners have so far said Athens must comply with the
terms of the current bailout, which require it to run a 3 percent
primary budget surplus this year, before debt service payments.
Senior euro zone officials were due to hold a teleconference later
on Thursday to discuss the Greek application.
The wording chosen could help to satisfy at least some of the
concerns that have held up agreement over the past two weeks,
allowing Athens to avoid saying it is extending the current program
that it opposes while creditors can avoid accepting a "loan
agreement" without strings attached.
Crucial details remain to be clarified on the fiscal targets, labor
market reforms, privatization and other measures due to be
implemented under the existing program.
Government spokesman Gabriel Sakellaridis dismissed a German
newspaper report that Athens was under pressure to impose capital
controls on Greeks pulling their money out of local banks, telling
Reuters that such a scenario "had no bearing on reality".
An ECB spokeswoman also denied the Frankfurter Allgemeine Zeitung
report, saying there had been no discussion of capital controls at a
meeting of the central bank's Governing Council on Wednesday, which
slightly raised the limit on emergency lending to Greek banks.
Greek stocks rose on Thursday's developments, with the benchmark
Athens stock index up 2 percent while banks gained 9 percent.
"We are doing everything to reach a mutually beneficial agreement.
Our aim is to conclude this agreement soon," Sakellaridis told Skai
TV earlier on Thursday. "We are trying to find common points."
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GERMAN COMPROMISE?
EU paymaster Germany and fellow euro zone governments have so far
insisted no loan deal without the full bailout conditions is on the
table. Tsipras promised to ditch austerity measures imposed by the
lenders when he was elected last month.
German Finance Minister Wolfgang Schaeuble has poured scorn on
suggestions that Athens could negotiate an extension of euro zone
funding without making any promises to push on with budget cuts and
economic reforms.
But on Wednesday he indicated there may be some possibility of a
compromise. "Our room for maneuver is limited," he said during a
debate in Berlin, adding, "We must keep in mind that we have a huge
responsibility to keep Europe stable."
Greek Finance Minister Yanis Varoufakis expressed confidence on
Wednesday that euro zone finance ministers would approve the Athens
government's proposal on Friday. "The application will be written in
such a way so that it will satisfy both the Greek side and the
president of the Eurogroup," he said.
Greece's finances are in peril. It 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.
Likewise its banks are dependent on the emergency funding controlled
by the ECB in order to pay out depositors who have been withdrawing
their cash. The ECB agreed on Wednesday to raise a cap on funding
available under its Emergency Liquidity Assistance scheme to 68.3
billion euros (US$78 billion), a person familiar with the ECB talks
said.
That was a rise of just 3.3 billion euros, less than Greece had
requested. The modest increase raises the pressure for a compromise
at the Eurogroup. One senior banker said it would be enough to keep
Greek banks afloat only for another week if present outflow trends
persist.
Euro zone finance ministers rejected Greek proposals to avoid the
bailout conditions at a meeting on Monday.
German Chancellor Angela Merkel made clear on Wednesday that Athens
would have to give as well as take in negotiations.
"If countries are in trouble, we show solidarity," she said in a
speech to conservative supporters, naming Greece and other euro zone
countries that had to take bailout during the debt crisis. But she
added, "Solidarity is not a one-way street. Solidarity and efforts
by the countries themselves are two sides of the same coin. And this
won’t change."
(Additional reporting by Renee Maltezou and Deepa Babington in
Athens, Jan Strupczewski in Brussels, Gernot Heller, Michael
Nienaber and Caroline Copley in Berlin, Jason Lange in Washington
and Paul Carrel in Frankfurt; Writing by David Stamp and Deepa
Babington; Editing by Peter Graff and Paul Taylor)
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