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Greece bailout: Time is running out to avoid 'catastrophic' Greek exit from euro, warns EU Greece bailout: Time is running out to avoid 'catastrophic' Greek exit from euro, warns EU
(about 5 hours later)
Eurozone finance ministers and officials have warned that time was running out to avoid a “catastrophic” Greek exit from the single currency, as they awaited a new proposal from Athens aimed at keeping Greece afloat beyond the end of this month. Eurozone finance ministers and officials have warned that time is running out to avoid a “catastrophic” Greek exit from the single currency, as they awaited a new proposal from Athens aimed at keeping Greece afloat beyond the end of this month.
The finance ministers have given Greece until Friday to request an extension to their €240bn (£176bn) bailout programme, or the last tranche of money will be withheld and Greece will not be able to pay debts in the coming months. A spokesperson for Greek Prime Minister Alexis Tsipras has instead said they will ask for an extension to their “loan agreement” on Thursday. The finance ministers have given Greece until tomorrow to request an extension to their €240bn (£176bn) bailout programme, or the last tranche of money will be withheld and Greece will not be able to pay debts in the coming months. A spokesperson for Greek Prime Minister Alexis Tsipras has instead said they will today ask for an extension to their “loan agreement”.
EU officials were cautious, and are waiting to see if the proposal is a request for a bailout extension under a more politically palatable name for a Prime Minister elected last month on the promise of ending austerity. Greek government spokesman Gavriil Sakellaridis claimed that Athens’ plan would involve a loan extension but apparently without the required spending cuts and tax hikes. “We believe the terms of the bailout cannot continue by any means,” Mr Sakellaridis told Antenna TV. The European part of Greece’s bailout expires on 28 February and if no deal is reached by then, the European Central Bank (ECB) would face pressure from eurozone governments to cut off emergency financing for Greek banks. Today the ECB reportedly agreed to increase those emergency funds by about £2.4bn to £50.3bn, money that is crucial because the banks’ customers have been withdrawing funds and sending them overseas.
Germany’s finance minister, Wolfgang Schäuble, seemed sceptical that the new proposal would require Greece to honour its existing financial commitments. “It’s not about extending a credit programme but about whether this bailout programme will be fulfilled, yes or no,” he said. EU officials were cautious and are waiting to see if Greece’s new proposal is a request for a bailout extension under a more politically palatable name for a Prime Minister elected last month on the promise of ending austerity. Greek government spokesman Gavriil Sakellaridis claimed that Athens’ plan would involve a loan extension but apparently without the required spending cuts and tax hikes. “We believe the terms of the bailout cannot continue by any means,” Mr Sakellaridis told Antenna TV.
However his French counterpart, Michel Sapin, said they had to do everything in their power to come up with a deal which would give Greece and its creditors some more breathing space after the expiry of the current programme on 28 February. A Reuters report suggested that Greece could run out of money by the end of March without assistance from its creditors. Greek Finance Minister Yanis Varoufakis said: “I want to believe that [the negotiations] will end well tomorrow, the day after tomorrow. We are on a good path... [but] until we reach a result, nobody can be certain.”
“If we ever headed towards a Greek exit from the euro it would be a serious political failure,” Mr Sapin told parliament. “I want there to be a swift deal to avoid any catastrophic situation and... I want us to have the time to discuss a new programme.” Germany’s Finance Minister, Wolfgang Schäuble, seemed sceptical that the new proposal would require Greece to honour its existing financial commitments. “It’s not about extending a credit programme but about whether this bailout programme will be fulfilled.” 
An EU official said it was imperative to get the new Greek proposal as early as possible so that all sides could examine the detail and call another emergency meeting of the 19 eurozone ministers before the Friday deadline. Given the narrowing timeframe – and the combative atmosphere at the Brussels meetings attended by Greek Finance Minister Yanis Varoufakis – diplomats suggested that the next round of talks could be held over the telephone. However, his French counterpart, Michel Sapin, said they had to do everything in their power to come up with a deal. A Reuters report yesterday suggested that Greece could run out of money by the end of March without assistance from its creditors.
“If we ever headed towards a Greek exit from the euro it would be a serious political failure,” Mr Sapin told parliament. “I want there to be a swift deal to avoid any catastrophic situation.”