ECB increases emergency funding for Greece by €3.3bn

The European Central Bank last night granted minimal leeway to Greece's banks, increasing the emergency funding available by €3.3 billion, well below the €5bn-€10bn that was requested by Greece, according to some sources.

The ECB’s governing council agreed to raise the emergency funding available to Greek banks to €68.3 billion, a slight increase on the previous limit, for a period of two weeks.

The move comes ahead of today’s expected request by Athens to extend its “loan agreement” with international lenders, a day later than had been indicated.

It is still far from certain whether the eurogroup of finance ministers will back an agreement without specific commitments from Athens to implement fiscal measures. EU officials in Brussels yesterday stressed that any extension request would have to include “specific conditionalities”.

Extension

A German finance ministry spokesman again indicated that Greece would be required to complete its bailout programme. “We’re prepared to discuss an extension, but only if the Greek side has the clear intention to complete the programme,” he said.

Meanwhile, back in Athens Greece’s parliament backed prime minister Alexis Tsipras’s candidate for the country’s presidency .

Lawyer and academic Prokopis Pavlopoulos (64), a member of the opposition party New Democracy, was elected president having secured the support of 223 of the 300 members of the chamber.

Mr Pavlopoulos, widely considered pro-European, is perceived as a consensus candidate who drew support from both right and left in the Greek parliament.

“Broader social, political consensus is a necessary prerequisite for tackling all difficulties,” Mr Tsipras said as he announced Mr Pavlopoulos’s candidacy.

Reforms reversal The

parliament will tomorrow vote on a raft of measures including a reversal of a number of labour market reforms demanded by the EU-IMF troika, as Mr Tsipras presses ahead with a number of his pre-election pledges.

The eurogroup of finance ministers could gather in Brussels as early as tomorrow for an emergency meeting to consider Greece’s anticipated request for an extension of its loan agreements with international creditors. It is expected to submit a request for an extension of between four and six months today to the eurogroup.

On Monday, Greek finance minister Yanis Varoufakis said he had been prepared to sign up to the original proposal, which set out plans for a four-month temporary extension of Greece's loan agreement in exchange for a number of conditions

These included a commitment by Greece to honour its debts to all its creditors and not to take any unilateral action during the transition period.

Cuts to pensions

Greece had requested that it should not have to undertake any “clearly recessionary” measures such as cuts to low pensions and an increase in VAT rates,

Mr Varoufakis

said.

However, he said that eurogroup president Jeroen Dijsselbloem had, 15 minutes before Monday's eurogroup meeting, presented a new document which was unacceptable to Greece.

Uncertainty about the next phase of the programme has prompted an outflow of deposits from Greek banks, with some estimates suggesting that up to €2 billion a week could be leaving them.

Meanwhile, the White House confirmed that US treasury secretary Jack Lew had phoned Mr Varoufakis and urged his government to strike a deal with the euro zone and the International Monetary Fund.

As the IMF’s largest shareholder, the US is to some extent involved in the Greek bailout, though the vast bulk of outstanding Greek debt is owed to other European countries.