Exclusive: Euro zone mulls extending Greek bailout by six months, Athens refuses

Thu Dec 4, 2014 12:23pm EST
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By Jan Strupczewski

ATHENS (Reuters) - Euro zone ministers are considering extending Greece's bailout by six months to mid-2015, according to a document obtained by Reuters, but Athens said it was only willing to consider an extension of a few weeks to the unpopular program.

Extending the program beyond a few weeks into the new year would complicate Prime Minister Antonis Samaras’ efforts to secure victory for his preferred candidate in a presidential vote in February. He had depended on exiting the EU/IMF bailout by the end of the year, when funding from the EU is due to end.

"Greece has not received any written proposal on an extension," a government official told Reuters. "In any case, everything that the prime minister and Finance Minister (Gikas) Hardouvelis has said stands -- that Greece can discuss only a technical extension, which cannot be longer than a few weeks."

An extension of the bailout, under which Athens will have received a total of 240 billion euros ($300 billion) since 2010, is necessary because international lenders and the Greek government are still negotiating what Athens must do to get the remaining 1.8 billion euros and secure a back-up credit line for after the bailout ends and Greece returns to market financing.

Athens needed to wrap up its bailout review by a meeting on Dec. 8 of euro zone ministers to meet the timeline for exiting by the end of the year. But the talks have been held up by a row over a budget shortfall next year, and a senior euro zone official on Wednesday said Greece would have to ask for an extension on its bailout because a credit line to replace the program will not be ready in time.

Euro zone officials are now urging the country to reach a deal by Dec. 14, a Greek finance ministry official said.

"Although the purpose of the technical extension would be to give more time to the Greek authorities to prepare legislation for adoption in January 2015, the technical extension could be for a longer period to cover for the possibility of delays in the run up to the Greek Presidential elections," the document, prepared for euro zone ministers, said.

"In this respect, an extension until end Q2 2015 seems appropriate, with the central scenario assuming a staff level agreement before the Eurogroup on 8 December, completion of all the prior actions by mid-January, a final disbursement from the EFSF (euro zone bailout fund), and a completion of the Enhanced Conditions Credit Line (ECCL) procedures still before the end of January," it said.   Continued...

A Greek national flag flutters in the wind at the Plaka district in Athens November 7, 2014.   REUTERS/Alkis Konstantinidis