Cyprus Mail

Greece to need another bailout extension – euro zone official

By Robin Emmott

greece will have to ask for a new extension to its euro zone bailout programme before 1.8 billion euros in pending aid can be paid, a senior euro zone official said on Friday, stressing that a new government must first be in place to do so.

Greece’s programme with the euro zone expires on Feb. 28. Although the International Monetary Fund will continue to back Athens, the country needs to be under an European accord to receive the final euro zone loans and to be eligible for support from the European Central Bank.
Without an extension, Athens would also lose access to almost 11 billion euros in euro zone bailout bonds now available to safeguard Greek bank capital needs in the Hellenic Financial Stability Fund.

Given Greek elections on Sunday, one senior euro zone official said it was “on the outer fringes of statistical probability” that the EU, IMF and ECB would complete a long-delayed fifth review of Greece’s international aid programme and release the final euro zone disbursement.
But the official, who declined to be named, played down concerns about a standoff with the leftist Syriza party and international lenders that would drive Greece to bankruptcy and push the country out of the euro zone.

The official said euro zone finance ministers will discuss financing for Greece on Monday at a meeting in Brussels and are expected to signal that they are willing to give Athens more time under a programme.

“Another extension may need to be considered,” the official said, referring to the programme that was originally due to expire at the end of last year. “A precondition for such an extension is that you have to ask for it.”

After two bailouts totalling 240 billion euros ($270 billion) since 2010, the outgoing Greek government wanted to switch back to market financing, while Syriza wants to drop the bailout altogether and says it will demand a debt write-off.

But European Commission President Jean-Claude has said Greece will remain in the euro zone and the official reiterated that there was room to work with Athens whatever the outcome of the elections.

“Sometimes it sounds as if, whatever happens, there will be debt relief. The picture is much more differentiated. There is the agreement under certain conditions to enter into these discussions,” the official said.

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