Greece may request extension of loan

A breakthrough in the Greek debt impasse looked imminent last night after the Greek government indicated that it may request a temporary extension of its loan arrangement with international creditors today.

The development, which is expected to see Greece requesting a four-month extension of its loans from the EU and IMF, followed a day of increasing acrimony between Athens and its international creditors as the EU ratcheted up pressure on the Syriza-led government to request some form of programme extension.

However, with Greek officials suggesting that the extension referred to the "loan agreements" between Greece and its creditors rather than the bailout itself, it remained unclear whether the euro group would sanction such an extension without a commitment by Greece to adhere to bailout demands. Any decision to grant an extension to Greece would need the approval of all euro zone member states, including Germany.

Earlier, Greek Prime Minister Alexis Tsipras vowed to continue with pre-election promises and strike a deal "without austerity."

“We are not in a hurry and we will not compromise,” Mr Tsipras told the Parliament in Athens.

“We are working hard for an honest and mutually beneficial deal, a deal without austerity, without the bailout which has destroyed Greece in recent years.”

While Greece was not formally on the agenda at the second day of meetings of European finance ministers in Brussels, Wolfgang Schauble again voiced frustration at the lack of firm proposals presented by Greece yesterday, as Mr Tsipras accused the German finance minister of "losing his cool" at Monday's euro group meeting in Brussels.

Crucial

“The crucial question is and remains that Greece has to decide: does it really want this program or doesn’t it?” Mr Schauble said after the meeting.

“None of my colleagues have understood so far what Greece really wants in the end. Whether Greece itself knows is also the question.”

With the ECB due to reassess its decision to extend emergency liquidity assistance (ELA) to Greek banks today, stock markets responded calmly yesterday to the news that talks between Athens and the euro group of euro zone finance ministers on Monday ended without agreement, for the second time in five days.

Despite an initial slump, European stock markets recovered, reflecting optimism that a deal was still achievable despite entrenched differences between Athens and its international creditors on the next step forward for Greece.

Yesterday, senior EU figures appeared to be unanimous in their contention that an extension of the bailout, albeit on a temporary basis, was the only option for Greece.

"The ball is in the camp of the Greek government," EU Commissioner Pierre Moscovici told journalists on the fringes of yesterday's ecofin finance ministers' meeting.