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Wednesday 13 December 2017

Greece set to request loan extension from EU

Wolfgang Schaeuble
Wolfgang Schaeuble

GREECE looks poised to seek a six-month loan extension today with attention now focused on whether eurozone finance ministers, who have been pushing for an extension of the current bailout, will agree to cede ground.

Crunch talks collapsed in Brussels on Monday because Athens wouldn't accept a call for an extension to its bailout programme.

The country was given just days to decide whether it wished to alter course and request an extension, but the new Greek government has been strongly resisting the move.

austerity

Athens is now expected to formally request an extension to its loan arrangements, to avoid running out of cash, and not an extension of the austerity policies imposed under its bailout.

Unlike three years ago, when fears Greece could crash out of the euro panicked investors, markets are holding steady.

In fact, European stocks had risen to a seven-year high by mid-afternoon yesterday amid investor speculation that the country will be able to reach a compromise.

Bloomberg quoted a Greek government official as saying the country would submit its request for a six-month loan extension today - a day later than originally planned.

But there was little sign of a softening in the stance from Germany, with Finance Minister Wolfgang Schaeuble saying: "It's not about extending a credit programme but about whether this bailout programme will be fulfilled."

However, Germany's economy minister Sigmar Gabriel welcomed what he referred to as a signal from Greece that it was ready to negotiate.

It is understood that the loan request would be based on a text drawn up earlier this week by EU Economics Commissioner Pierre Moscovici, which was discarded by eurozone finance ministers on Monday.

Discussions allegedly ended on Monday night after Greek negotiators settled on a draft agreement with the European Commission, only for the text to be replaced with alternative wording when it came to signing the deal.

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