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Greece submits request for loan extension from sceptical euro zone

* Athens uses vital EU wording to request extension

* Euro zone officials to discuss whether letter meets terms

* Greek bailout deal due to expire on Feb. 28

* State faces running out of cash by late March – source

* ECB raises emergency funding for Greek banks only modestly (Adds)

By Renee Maltezou and George Georgiopoulos

ATHENS, Feb 19 (Reuters) – Greece formally requested a six-month extension to its euro zone loan agreement on Thursday as it races to avoid running out of cash within weeks and overcome resistance from sceptical partners led by Germany.

With its EU/IMF bailout programme due to expire in little more than a week, the government of leftist Prime Minister Alexis Tsipras urgently needs to secure a financial lifeline to keep the country afloat beyond late March.

Specifically, Athens asked for an extension to its so-called “Master Financial Assistance Facility Agreement” with the euro zone, the official told Reuters. However, Greece is proposing that the terms are different from its current bailout obligations, the official said.

Jeroen Dijsselbloem, chairman of the Eurogroup of finance ministers of the currency area, confirmed the news, tweeting: “Received Greek request for six-month extension.” He gave no further details.

The request boosted hopes for a last minute compromise to avert a Greek bankruptcy and exit from the euro zone however it was not clear if the proposal would be acceptable to euro zone partners who insist Athens comply with all bailout terms.

Senior euro zone officials were due to hold a teleconference later on Thursday to discuss the Greek application. If they are satisfied, then Eurogroup finance ministers will hold a conference call on Friday to conclude an agreement, euro zone sources said.

The wording chosen could help satisfy at least some of the concerns that have held up agreement over the past two weeks, allowing Athens to avoid saying it is extending the current programme that it opposes while creditors can avoid accepting a “loan agreement” without strings attached.

However, crucial details remain to be clarified on fiscal targets, labour market reforms, privatisations and other measures due to be implemented under the existing programme.

Government spokesman Gabriel Sakellaridis dismissed a German newspaper report that Athens was under pressure to impose capital controls, telling Reuters that such a scenario “had no bearing on reality”.

An ECB spokeswoman also denied the Frankfurter Allgemeine Zeitung report, saying there had been no discussion of capital controls at a meeting of the central bank’s governing council on Wednesday, which slightly raised the limit on emergency lending to Greek banks.

Greek stocks rose on Thursday’s developments, with the benchmark Athens stock index up 2 percent while banks gained 4.8 percent.

“We are doing everything to reach a mutually beneficial agreement. Our aim is to conclude this agreement soon,” Sakellaridis told Skai TV earlier on Thursday. “We are trying to find common points.”

GERMAN COMPROMISE?

EU paymaster Germany and fellow euro zone governments have so far insisted no loan deal without the full bailout conditions is on the table. Tsipras promised to ditch austerity measures imposed by the lenders when he was elected last month.

German Finance Minister Wolfgang Schaeuble has poured scorn on suggestions that Athens could negotiate an extension of euro zone funding without making any promises to push on with budget cuts and economic reforms.

But on Wednesday he indicated there may be some possibility of a compromise. “Our room for manoeuvre is limited,” he said during a debate in Berlin, adding, “We must keep in mind that we have a huge responsibility to keep Europe stable.”

Greek Finance Minister Yanis Varoufakis expressed confidence on Wednesday that euro zone finance ministers would approve the Athens government’s proposal on Friday.

“The application will be written in such a way so that it will satisfy both the Greek side and the president of the Eurogroup,” he said.

Greece’s finances are in peril. It is burning through its cash reserves and could run out of money by the end of March without fresh funds, a person familiar with the figures said.

Likewise its banks are dependent on emergency funding controlled by the European Central Bank in order to pay out depositors who have been withdrawing their cash. The ECB agreed on Wednesday to raise a cap on funding available under its Emergency Liquidity Assistance scheme to 68.3 billion euros (US$78 billion), a person familiar with the ECB talks said.

That was a rise of just 3.3 billion euros, less than Greece had requested. The modest increase raises the pressure for a compromise at the Eurogroup. One senior banker said it would be enough to keep Greek banks afloat only for another week if present outflow trends persist.

Finance ministers of the 19-nation currency bloc rejected Greek proposals to avoid the bailout conditions at a meeting on Monday.

German Chancellor Angela Merkel made clear on Wednesday that Greece would have to give as well as take in negotiations.

“If countries are in trouble, we show solidarity,” she said in a speech to conservative supporters, naming Greece and other euro zone countries that had to take bailouts during the debt crisis. But she added, “Solidarity is not a one-way street. Solidarity and efforts by the countries themselves are two sides of the same coin. And this won’t change.” (Additional reporting by Renee Maltezou and Deepa Babington in Athens, Jan Strupczewski in Brussels, Gernot Heller, Michael Nienaber and Caroline Copley in Berlin, Jason Lange in Washington and Paul Carrel in Frankfurt; Writing by David Stamp and Deepa Babington; Editing by Peter Graff and Paul Taylor)

Politics & GovernmentBudget, Tax & Economyloan agreementGreek bailoutEuro zone […]

Greece to seek loan extension from Euro zone

By Lefteris Papadimas and Jan Strupczewski

ATHENS/BRUSSELS (Reuters) – Greece is expected to ask on Thursday for an extension to its “loan agreement” with the euro zone as it faces running out of cash within weeks, but it must overcome resistance from sceptical partners led by Germany.

With Greece’s bailout programme due to expire in little more than a week, the government of leftist Prime Minister Alexis Tsipras urgently needs to secure a financial lifeline to keep the country afloat beyond late next month.

Financial markets rallied after Athens said on Wednesday it would submit a request to extend the loan agreement for up to six months, hoping this signalled a last minute compromise to avert a Greek bankruptcy and exit from the euro zone.

EU paymaster Germany and fellow euro zone governments have insisted that no such deal is on the table and Athens must seek an extension to its full bailout, the very programme that Tsipras promised to ditch when he was elected last month.

German Finance Minister Wolfgang Schaeuble has poured scorn on suggestions that Athens could negotiate an extension of euro zone funding without making any promises to push on with budget cuts and economic reforms.

But on Wednesday he indicated there may be some possibility of a compromise. “Our room for manoeuvre is limited,” he said during a debate in Berlin, adding, “We must keep in mind that we have a huge responsibility to keep Europe stable.”

Greek Finance Minister Yanis Varoufakis expressed confidence on Wednesday that euro zone finance ministers would approve the Athens government proposal in a teleconference on Friday. “The application will be written in such a way so that it will satisfy both the Greek side and the president of the Eurogroup,” he said.

FINANCES IN PERIL

Greece’s finances are in peril. It is burning through its cash reserves and could run out of money by the end of March without fresh funds, a person familiar with the figures said. The person said Athens had enough to repay a 1.5 billion euro instalment to the International Monetary Fund next month but would struggle to pay public sector salaries and pensions in April.

Likewise its banks are dependent on emergency funding controlled by the European Central Bank. The ECB agreed on Wednesday to raise a cap on funding available under the Emergency Liquidity Assistance scheme to 68.3 billion euros (£50.4 billion), a person familiar with the ECB talks said.

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Greek Prime Minister Alexis Tsipras meets with former Greek Interior Minister and former New Democra …

That was a rise of just 3.3 billion euros, below what Greece had requested. “The increase in the cap was a bit below what was requested, about 5 billion more, and expected,” one senior banker said. “Assuming the present outflow trends persist, it is enough to carry us over for another week.”

This modest increase keeps Greece’s banks, and thereby the government, on a tight leash and raises the pressure for a compromise at the Eurogroup.

Whether finance ministers of the 19-nation currency bloc, who rejected such Greece’s ideas at a meeting on Monday, accept its request as a basis to resume negotiations will depend on how it is formulated, an EU source said. The wording has to match EU legal texts to win approval in several euro zone parliaments.

Tsipras said talks were at a crucial stage and his demands for an end to austerity were winning backing. “We have managed for the first time through contacts with foreign leaders to create a positive stance on our requests,” he said at a meeting with President Karolos Papoulias.

In a sign of concern in Washington at the financial risks to a strategically located NATO ally, U.S. Treasury Secretary Jack Lew telephoned Varoufakis to urge Greece to strike a deal with the euro zone and IMF, warning that failure would lead to immediate hardship.

Lew said the United States would continue to prod all parties in the talks to make concrete progress, noting that uncertainty was “not good for Europe.”

The Athens government released documents on Wednesday indicating that it was taking a more flexible line to placate euro zone creditors than its anti-bailout rhetoric at home has suggested. They showed Varoufakis had offered to accept conditions on an extension to its loan agreements and even an inspection by the European Commission at a fraught meeting in Brussels on Monday.

German Chancellor Angela Merkel signalled on Wednesday that Greece would have to give as well as take in negotiations.

“If countries are in trouble, we show solidarity,” she said in a speech to conservative supporters, naming Greece and other euro zone countries that had to take bailouts during the debt crisis. But she added, “Solidarity is not a one-way street. Solidarity and efforts by the countries themselves are two sides of the same coin. And this won’t change.”

(Additional reporting by George Georgiopoulos, Lefteris Papadimas and Deepa Babington in Athens, Jan Strupczewski in Brussels, Gernot Heller, Michael Nienaber and Caroline Copley in Berlin, Jason Lange in Washington and Paul Carrel in Frankfurt; Writing by David Stamp; Editing by Toni Reinhold)

Politics & GovernmentBudget, Tax & EconomyAlexis Tsiprasloan agreement […]

Greece says has no cash problem, to present plan next week

By Renee Maltezou

ATHENS (Reuters) – Greece said on Saturday it had no short-term cash problem and that it will hand its European Union partners a comprehensive plan next week for managing the transition to a new debt deal.

The EU has warned time is running out to avoid a financing crisis in Greece.

The new left-wing government in Athens has rejected the austerity that was forced upon the country by an EU/International Monetary Fund bailout and instead says it wants a “bridge agreement” until it has negotiated a new deal.

“We will present a comprehensive proposal on Wednesday,” Finance Minister Yanis Varoufakis said, referring to a meeting of euro zone finance ministers in Brussels on that day.

Varoufakis was attending a cabinet meeting called to prepare the government’s overall policy programme, which Prime Minister Alexis Tsipras will present to parliament on Sunday.

On Friday, Jeroen Dijsselbloem, who chairs the Eurogroup of euro zone finance ministers, told Reuters that Greece had to apply for an extension of its reform-for-loans plan by Feb. 16 to ensure the euro zone keeps backing it financially.

This is essentially an extension of the current bailout, something Greece has said it does not want and will not accept. It is due a 7.2 billion euro trance from the EU/IMF bailout, which it says it does not want because of the austerity strings attached.

Instead, Athens wants authority from the euro zone to issue more short-term debt to tide it over until a new deal is agreed, and to receive already-agreed profits that the European Central Bank and other central banks have gained from holding Greek bonds.

Greece faces interest rate payments of around 2 billion euros over February and should repay a 1.5 billion euro loan to the IMF in March.

That has raised concerns the country may suffer a cash crunch, but this was dismissed on Saturday by the Greek official in charge of the government’s accounts.

“During the time span of the negotiations there is no problem (of liquidity). This does not mean that there will be a problem afterwards,” Deputy Finance Minister Dimitris Mardas said on Mega TV.

Asked whether the state may suffer a cash crunch if talks drag on until May, the minister said he did not expect the negotiations over a new deal to last that long.

“Even if they did, we can find money,” he said.

(Writing by Jeremy Gaunt; editing by John Stonestreet)

Politics & GovernmentBudget, Tax & EconomyEuropean Union […]