Germany rejects Greek proposal for EU loan extension

Berlin says the letter from the new Greek government "is not a substantial proposal for a solution."

    Greek PM Alexis Tsipras and Varoufakis, are meeting senior officials across Europe to seek support for a new debt agreement [Reuters]
    Greek PM Alexis Tsipras and Varoufakis, are meeting senior officials across Europe to seek support for a new debt agreement [Reuters]

    Germany has rejected a request by Greece to its European partners for a six-month extension to its EU loan programme, saying it was "not a substantial proposal for a solution".

    "The letter from Athens is not a substantial proposal for a solution," said German Finance Ministry spokesman Martin Jaeger in a short statement on Thursday.

    "In truth it aims at bridge financing, without meeting the requirements of the programme. The letter does not meet the criteria agreed upon in the Eurogroup on Monday."

    Debt-wracked Greece has sent a make-or-break request to extend its European loan programme that expires at the end of the month, but demanding to end hated austerity measures.

    Eurozone finance ministers will meet in Brussels on Friday to try to reach an agreement, but Germany's initial reaction suggested the sides were still far apart.

    Germany has repeatedly postponed offering Greece more time outside the current arrangement, especially the austerity commitments, arguing that any extension of loans was "inextricably" linked to the reforms earlier agreed by Athens.

    Eurozone finance ministers set five conditions at their talks on Monday for continuing their financial support to Athens, including a pledge not to reverse previously accepted reforms.

    Other conditions include that Athens should not undertake new reforms that would burden Greece's public finances, and a commitment by Athens to reimburse all its creditors.

    Bailout proposal

    Greece's request on Thursday was made "to provide a protection umbrella for (Greece's) banking system," a government official in Athens said.

    Speaking on customary condition of anonymity, he said the extension would concern the loan agreement that has kept Greece from bankruptcy for five years, and whose main component expires in nine days.

    The extension would give both sides time to agree on a longer-lasting aid programme that would keep Greece solvent but also lighten the terms of repaying its 240 billion euros in bailout loans.

    Greece's plan on Thursday included a proposal for a new five-year agreement with European partners that would include easing the country's huge debt load.

    Thursday's request was made "to provide a protection umbrella for (Greece's) banking system," a government official in Athens said.

    Speaking on customary condition of anonymity, he said the extension would concern the loan agreement that has kept Greece from bankruptcy for five years, and whose main component expires in nine days.

    The extension would give both sides time to agree on a longer-lasting aid program that would keep Greece solvent but also lighten the terms of repaying its 240 billion euros in bailout loans.

    Greece's plan on Thursday included a proposal for a new five-year agreement with European partners that would include easing the country's huge debt load.

    SOURCE: Associated Press


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