Friday, February 13, 2015

Greece doesn't want anymore strings attached

Greece's new leftist-led government, isolated in theeuro zone and under pressure from the European Central Bank, said on Friday it wanted no more bailout money with strings attached from the European Union and International Monetary Fund.
Instead, a government official said, it wanted authority from theeuro zone to issue more short-term debt, and to receive profits that the European Central Bank and other central banks have gained from holding Greek bonds.
The official said Greece was in effect asking for a "bridge agreement" to keep state finances running until Athens can present a new debt and reform programme, "not a new bailout, with terms, inspection visits, etc.".
"It is ... necessary that Greece is given the possibility to issue T-bills, beyond the (current) 15 billion euro threshold, in order to cover any extra needs," said the official, asking not be named.
Finance Minister Yanis Varoufakis returned empty-handed from a tour of European capitals in which even left-leaning governments in France and Italy insisted Greece must stick to commitments made to the European Union and IMF and rejected any debt write-off.
The Athens official made clear that the new government, which came to power on a wave of anti-austerity anger in elections last month, now wanted to forego remaining bailout money that had austerity strings attached:
"Greece is not asking for the remaining tranches of the current bailout programme - except the 1.9 billion euros that the ECB and the EU member states' central banks must return."
Euro zone finance ministers will discuss how to proceed with financial support for Athens at a special session next Wednesday ahead of the first summit of EU leaders with the new Greek prime minister, Alexis Tsipras, the following day.
However, the chairman of the finance ministers said the following meeting of the Eurogroup on Feb. 16 would be Greece's last chance to apply for a bailout extension because some euro zone countries would need to consult their parliaments.
"Time will become very short if they (Greece) don't ask for an extension (by then)," said Jeroen Dijsselbloem.
The current bailout for Greece expires on Feb 28. Without it the country will not get financing or debt relief from its lenders and has little hope of financing itself in the markets.

NO PROGRESS SO FAR
Participants said no progress was made at a preparatory meeting of senior finance officials in Brussels on Thursday because Greece and its euro zone partners were so far apart.
"It was Greece against all others, basically one versus 18," one official said.
Athens' partners broadly lined up in support of a hardline German document rejecting any roll-back of reforms or commitments made by previous Greek governments.
Tsipras and his ministers promised in their first days in office to raise the minimum wage, re-hire some sacked government employees and stop some privatisations.
This clashed with conditions set by the IMF and euro zone countries, which have lent Athens a total of 240 billion euros ($270 billion).
The ECB raised the stakes this week by deciding to bar Greek banks from using Greek government bonds as collateral to borrow from the central bank as long as there is no prospect of an agreed bailout programme.
That makes lenders dependent on more costly emergency liquidity from the Greek central bank, which the ECB can stop at any time.
Greek bank shares fell further on Friday at the end of a week of wild swings, as brokers cut their forecasts on worries over dwindling deposits and brinkmanship between Athens and its creditors.
Ratings agency Standard & Poor's added to Greece's discomfort by cutting its long-term sovereign debt to 'B minus' from 'B', citing liquidity constraints weighing on Greece's banks.
Portugal, which emerged from its own EU/IMF bailout last year, joined the chorus of countries insisting that Greece must stick to the austerity medicine as Lisbon had done, pay its debts, and respect past agreements with EU partners.
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