Categories

A sample text widget

Etiam pulvinar consectetur dolor sed malesuada. Ut convallis euismod dolor nec pretium. Nunc ut tristique massa.

Nam sodales mi vitae dolor ullamcorper et vulputate enim accumsan. Morbi orci magna, tincidunt vitae molestie nec, molestie at mi. Nulla nulla lorem, suscipit in posuere in, interdum non magna.

Financially troubled Metro seeks to borrow $220 million to cover loan

Thumbnail

Metro officials want permission to borrow $220?million to cover a loan coming due in October, as the transit agency continues struggling under restrictions imposed last year after a federal audit found numerous instances of financial mismanagement.

At a time when some Washington-area officials have become increasingly skeptical of the way the Washington Metropolitan Area Transit Authority handles its money, the agency’s chief financial officer plans to ask Metro’s board of directors on Thursday to allow him to seek the short-term loan.

Metro already is juggling several large, short-term loans, borrowed largely to make up for federal grant money that has been slow in arriving. The Federal Transit Administration, which completed the audit in March 2014, has been limiting Metro’s access to grant money until the agency fixes the problems described in the scathing financial report.

Tuesday, D.C. Council Chairman Phil Mendelson (D) called a meeting between Metro board leaders and D.C. Council members in his office to relay concerns about how the transit agency’s financial troubles are being handled. And Wednesday, council member Elissa Silverman (I-At Large) hammered Metro leaders at a public oversight hearing, accusing the board of failing to hold individuals accountable for its financial lapses or to provide a “clear picture” of the agency’s financial state.

“It’s an incredible lack of management for such an important public agency. Yet no one seems to be held accountable for it,” said Silverman, a member of the council’s finance and revenue committee. She also described Metro as an agency “lurching from crisis to crisis.”

A Metro rider is seen through orange construction mesh near an escalator that was being repaired at the L’Enfant Plaza station on Wednesday. (Evelyn Hockstein/For The Washington Post) Metro, which has faced renewed criticism since a deadly smoke incident in a subway tunnel near the L’Enfant Plaza station Jan. 12, is already trying to persuade governments in the District, Maryland and Virginia to commit to providing the cash it needs over the long term to pay for new, safer railcars, as well as other badly needed improvements. If Metro obtains the $220?million loan, it would still need an additional $208?million to cover loans due later this year. It could tap cash reserves, obtain other financing or persuade some of its lenders to extend credit terms. In documents prepared ahead of the Metro board’s meeting Thursday, Metro staff said that despite cash-flow improvements, “pressures remain on the amount and availability of cash in the near term.” Metro’s total short-term debt amounts to $502?million, money that Metro Board Chairman Mortimer Downey said has been used primarily for building projects and improvements. Last month, Wells Fargo renewed an existing $75?million Metro line of credit through March 2016. Metro spokesman Dan Stessel said Wednesday that the transit agency expected to pay off “a significant part” of the remaining debt and was likely to seek credit extensions similar to what it obtained from Wells Fargo on only “a fraction” of the credit. Stessel did not provide specific details of the plan. Metro board leaders have said that they are seeking broad funding solutions within the jurisdictions that subsidize its operations and that it does not plan to increase fares or cut services to cover its costs.A Metro Silver Line train makes it way to Washington, passing another Metro train on a lower rail. (Evelyn Hockstein/For The Washington Post) D.C. Council member Jack Evans (D-Ward 2), who represents the city on the Metro board, said during Wednesday’s hearing that despite his concerns about Metro’s management, the agency needs the cash to expand. “If Metro just stays as it is, it will not fulfill the needs of our region,” said Evans, who led the hearing as chairman of the council’s finance and revenue committee. “We need a larger Metro. We need a Metro that goes more places, that has more cars to carry people.” Silverman, despite her criticism of Metro’s finances, espoused the same sentiments about the transit system’s future growth. But local government officials say they need reassurance that Metro is implementing the FTA’s recommendations to improve the agency’s financial practices before they authorize more funding. Metro’s own audit of its finances for the fiscal year that ended June 30, 2014, is still underway and four months overdue. Acting General Manager Jack Requa told the council hearing Wednesday that the audit was on track for completion in April. “Until there is comfort that the financial management systems and processes are in order, the [chief financial officer] cannot recommend long-term borrowing or additional capital requests beyond safety needs for WMATA,” David Umansky, a spokesman for D.C. Chief Financial Officer Jeffrey S. DeWitt, said later in an e-mail. Umansky said that DeWitt was at Tuesday’s closed meeting between council members and Metro board members, and that “he expressed his continuing concerns about the lack of audited financial statements and the need for WMATA to extend its lines of credit coming due in the upcoming months.” Last March, a federal review painted a troubling picture of the transit agency, questioning Metro’s management of billions of dollars in federal grant money. The review by the Federal Transit Administration found that Metro awarded millions in no-bid contracts, skirted contracting rules and overcharged the government. The problems led FTA to shut down the automatic flow of cash to Metro, instead requiring the agency to manually draw down grant money and comply with grant application procedures. The restrictions are likely to continue through fiscal 2015, according to Metro. Metro Board Chairman Mortimer Downey said Wednesday that even he had been surprised when he read the FTA report. “I take accountability for not knowing it was not done right,” Downey said in response to questions from Silverman. At the behest of members of Congress, the Government Accountability Office has begun its own audit of Metro. Silverman said in an interview after the hearing that Wednesday marked the first time she had heard “a sense of remorse or responsibility” when Downey spoke. But Metro board leaders during the hearing also painted a more positive picture of the agency’s financial recovery.

Requa said the transit agency was “performing to budget with almost $300?million cash on hand, with the ability to make timely payments” to employees and contractors.

Requa described the agency’s success in securing the $75?million credit extension from Wells Fargo. “Financial institutions have confidence in WMATA’s financial capacity,” he said.

Lori Aratani and Robert McCartney contributed to this report.

Abigail Hauslohner covers transportation and development for The Washington Post. Previously, she served as the Post’s Cairo bureau chief.

Paul Duggan covers the Metro system and transportation issues for The Washington Post.

[…]

Facing cash crunch, Greece to tap into bank rescue fund

To help ease the looming crisis, the government plans to take 555 million euros sitting at the Hellenic Financial Stability Fund (HFSF) — the bank rescue vehicle that was used in 2012 to recapitalise its main lenders.

Greece’s four top banks — National, Piraeus, Eurobank and Piraeus — handed over this money in commissions following their recapitalization.

Read More‘Wasting time’: War of words over Greece heats up

“This is money for which there is no other claim, it is available for the government,” a senior banker with direct knowledge of the matter told Reuters, declining to be named.

“The HFSF has discussed this with the European Stability Mechanism over the weekend and there is no issue,” the banker added, referring to the euro zone rescue fund. He said it was up to the government to decide when it withdraws the cash.

The HFSF, funded from the country’s EU/IMF bailout with 50 billion euros, recapitalized lenders with European Financial Stability Facility (EFSF) bonds, which banks can still use as collateral for direct funding from the European Central Bank.

Greece has been also looking to tap into the cash reserves of pension funds and public sector entities through repo transactions to cover part of its funding needs in March.

In such transactions, pension funds and other state entities sitting on cash lend the money to the country’s debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials have told Reuters.

Greece is due to resume talks with its creditors in Brussels on Wednesday, with the aim of unlocking desperately needed funding for the heavily indebted state.

[…]

Cash-strapped Greece repays first part of IMF loan due in March

By George Georgiopoulos and Lefteris Papadimas

ATHENS (Reuters) – Greece repaid on Friday the first 310 million euro instalment of a loan from the International Monetary Fund that falls due this month as it scrambles to cover its funding needs amid a cash crunch.

Prime Minister Alexis Tsipras’ newly elected government must pay a total of 1.5 billion euros to the IMF this month over two weeks starting on Friday against a backdrop of fast-depleting cash coffers.

“The payment of 310 million euros has been made, with a Friday value date,” a government official told Reuters, requesting anonymity.

Athens has to pay three other instalments, on March 13, 16 and 20 as part of repayments due to the IMF this month.

Tsipras’ government has said it will make the payments but there has been growing uncertainty over Greece’s cash position as it faces a steep fall in tax revenues while aid from EU/IMF lenders remains on hold until Athens completes promised reforms.

Athens sent an updated list of reforms on Friday to Brussels ahead of a meeting of euro zone finance ministers on Monday, a Greek government official said, adding that the list expanded on an earlier set of proposals.

The list includes measures to fight tax evasion and red tape and facilitate repayment of tax and pension fund arrears owed by millions of Greeks, the official said. It also proposes a “fiscal council” to generate savings for the state.

Athens is running out of options to fund itself despite striking a deal with the euro zone in February to extend its EU/IMF bailout by four months.

Greece has monthly needs of about 4.5 billion euros, including a wage and pension bill of 1.5 billion euros. It is not due to receive any financial aid until it completes a review by lenders of final reforms required under its bailout.

Greece’s central bank chief, Yannis Stournaras, said after talks with Tsipras on Friday that Greek banks were sufficiently capitalised and faced no problem with deposit outflows.

“There is full support for Greek banks (from the ECB), there is absolutely no danger,” he said after the meeting. But he added Monday’s euro zone meeting had to be “successful”.

The ECB will resume normal lending to Greek banks only when it sees Athens is complying with its bailout programme and is on track to receive a favourable review, ECB President Mario Draghi said on Thursday.

Athens has begun tapping cash held by pension funds and other entities to avoid running out of funds as early as this month. Various short-term options it has suggested to overcome the cash crunch have been blocked by euro zone lenders.

Tsipras’ leftist Syriza was elected on Jan. 25 on a promise to end the belt-tightening that came with the EU/IMF bailouts.

(Additional reporting by Renee Maltezou; Editing by Gareth Jones)

Politics & GovernmentBudget, Tax & EconomyInternational Monetary Fund […]

Landbank’s electronic loan program breaches P1-B mark

Government employees have embraced a new lending program that disburses cash electronically, which gives thousands of people across the country access to safe and cheap financing.

State-run Land Bank of the Philippines, one of the country’s biggest financial institutions, said that outstanding loans from its paperless credit system for government workers breached P1 billion last month.

Dubbed as Mobile Loan Saver (MLS), the facility allows public employees to take out salary loans from the bank. Loan proceeds are disbursed through electronic “wallets” that are linked to employees’ mobile phone subscriptions.

“The loan take-up has exceeded our initial projections,” Landbank president Gilda Pico said in a statement.

She said that through the facility, government employees were able to enjoy low interest costs, quick loan processing turnaround time, convenience and security. This helped workers who were “grappling with high interest rates slapped by loan sharks,” she said.

It offers a low interest rate of 0.83 percent a month, or about 10 percent effective interest rate annually.

More than 2,000 loan applications have already been approved with an average loan size per borrower of P144,000. In terms of geographical location, Metro Manila residents accounted for more than half of the borrowers, followed by Luzon at 20 percent. Visayas, and Mindanao accounted for 11 percent each.

[…]

Comment on After Ananda Krishnan loan, 1MDB now needs government cash by waterfrontcoolie

BY THE EDGE FINANCIAL DAILY
The Malaysian Insider
23 February 2015

1MDB was not only helped by billionaire T. Ananda Krishnan to settle its RM2 billion debt to banks, but it may also require a cash injection of as much as RM3 billion from its owner, the Ministry? of Finance (MoF), say sources.

They say the controversial debt-laden outfit is facing a cash crunch as income from its power assets is not enough for debt servicing and it has run out of borrowing options, as shown by having to turn to a businessman for help.

Ananda provided a 15-month RM2 billion loan to enable 1MDB to settle its loan with a consortium of local banks on February 13.

Sources familiar with the matter confirmed this with The Edge Financial Daily and also expressed their surprise that 1MDB president and group executive director Arul Kanda Kandasamy had dismissed media reports about the loan from Ananda as mere speculation.

Arul had announced on February 13 that 1MDB had settled the RM2 billion owed to the consortium led by Maybank and RHB Bank Bhd which was first due on November 30, 2014. The loan was settled in time to prevent the banks from declaring a default.

Arul did not explain how it raised the money in his February 13 statement, but in an interview with Mingguan Malaysia? two days later, he said reports that AK lent the money were pure speculation.

“Ananda has never said anything about this matter. This is speculation by third parties,” Mingguan Malaysia quoted him as saying.

“I don’t know how he (Arul) can claim that (AK did not help),” says a source.

“It was a simple, clean loan (with no conditions) as AK did not want to be seen as taking advantage (by setting tough conditions).”

In reply to questions by The Edge on why he could not just come out and disclose how 1MDB raised the money, Arul said: “The facts on the (settlement of the) loan will be revealed in the appropriate forum/time i.e. our next set of accounts. To demand any different is to set a different standard for 1MDB which is not only unfair, but also ignoring our right and that of our stakeholders to legal and commercial confidentiality”.

Paying off the RM2 billion debt does not solve the problem for 1MDB, which has total debts of more than RM42 billion and annual debt servicing of RM2.31 billion and a negative cash flow of RM2.25 billion in its financial year ended March 31, 2014.

Sources say that MoF is aware of 1MDB’s cash-flow problem and knows it may have no choice but to step in with a RM3 billion injection.

But in order for that to happen, approval has to be given by the Cabinet, given the large amount of money involved and all the controversy that 1MDB has generated.

The government had on February 11 and 12 raised RM2.1 billion through two treasury bill issues that money market dealers say were unusually large amounts. Sources say the MOF could be getting the money ready should it go ahead and come to the aid of 1MDB.

The cash injection will have to be done before 1MDB’s next financial year close on March 31, 2015 – which is just five weeks away.

?Despite concerns raised by so many parties, MOF officials have always insisted that 1MDB was financially healthy and that the government only had to put in RM1 million as initial capital because the company was strong enough to borrow to fund itself.

Arul, in a February 18 press release on its strategic review, said 1MDB would stop borrowing from now.

Sources say the truth is that 1MDB can no longer go to the market to borrow – whether through bank loans or bond issues.

“The size of its debt of RM42 billion, the massive negative cash flow it has experienced in the last two years plus its struggle to pay the RM2 billion makes it difficult for any bank to lend to them,” says one banker.

“Bond investors will also shy away from any new debt it wants to issue.”

1MDB recently called off a RM8.4 billion Islamic bond that it had planned to raise cash to finance the 3B power project.

Bankers say it was cancelled because of lukewarm response. Sources say bankers have also taken note of the fact that 1MDB has had difficulties proceeding with its plan to float its power assets to raise cash. – February 23, 2015.

[…]

Comment on After Ananda Krishnan loan, 1MDB now needs government cash by Justice Ipsofacto

BY THE EDGE FINANCIAL DAILY
The Malaysian Insider
23 February 2015

1MDB was not only helped by billionaire T. Ananda Krishnan to settle its RM2 billion debt to banks, but it may also require a cash injection of as much as RM3 billion from its owner, the Ministry? of Finance (MoF), say sources.

They say the controversial debt-laden outfit is facing a cash crunch as income from its power assets is not enough for debt servicing and it has run out of borrowing options, as shown by having to turn to a businessman for help.

Ananda provided a 15-month RM2 billion loan to enable 1MDB to settle its loan with a consortium of local banks on February 13.

Sources familiar with the matter confirmed this with The Edge Financial Daily and also expressed their surprise that 1MDB president and group executive director Arul Kanda Kandasamy had dismissed media reports about the loan from Ananda as mere speculation.

Arul had announced on February 13 that 1MDB had settled the RM2 billion owed to the consortium led by Maybank and RHB Bank Bhd which was first due on November 30, 2014. The loan was settled in time to prevent the banks from declaring a default.

Arul did not explain how it raised the money in his February 13 statement, but in an interview with Mingguan Malaysia? two days later, he said reports that AK lent the money were pure speculation.

“Ananda has never said anything about this matter. This is speculation by third parties,” Mingguan Malaysia quoted him as saying.

“I don’t know how he (Arul) can claim that (AK did not help),” says a source.

“It was a simple, clean loan (with no conditions) as AK did not want to be seen as taking advantage (by setting tough conditions).”

In reply to questions by The Edge on why he could not just come out and disclose how 1MDB raised the money, Arul said: “The facts on the (settlement of the) loan will be revealed in the appropriate forum/time i.e. our next set of accounts. To demand any different is to set a different standard for 1MDB which is not only unfair, but also ignoring our right and that of our stakeholders to legal and commercial confidentiality”.

Paying off the RM2 billion debt does not solve the problem for 1MDB, which has total debts of more than RM42 billion and annual debt servicing of RM2.31 billion and a negative cash flow of RM2.25 billion in its financial year ended March 31, 2014.

Sources say that MoF is aware of 1MDB’s cash-flow problem and knows it may have no choice but to step in with a RM3 billion injection.

But in order for that to happen, approval has to be given by the Cabinet, given the large amount of money involved and all the controversy that 1MDB has generated.

The government had on February 11 and 12 raised RM2.1 billion through two treasury bill issues that money market dealers say were unusually large amounts. Sources say the MOF could be getting the money ready should it go ahead and come to the aid of 1MDB.

The cash injection will have to be done before 1MDB’s next financial year close on March 31, 2015 – which is just five weeks away.

?Despite concerns raised by so many parties, MOF officials have always insisted that 1MDB was financially healthy and that the government only had to put in RM1 million as initial capital because the company was strong enough to borrow to fund itself.

Arul, in a February 18 press release on its strategic review, said 1MDB would stop borrowing from now.

Sources say the truth is that 1MDB can no longer go to the market to borrow – whether through bank loans or bond issues.

“The size of its debt of RM42 billion, the massive negative cash flow it has experienced in the last two years plus its struggle to pay the RM2 billion makes it difficult for any bank to lend to them,” says one banker.

“Bond investors will also shy away from any new debt it wants to issue.”

1MDB recently called off a RM8.4 billion Islamic bond that it had planned to raise cash to finance the 3B power project.

Bankers say it was cancelled because of lukewarm response. Sources say bankers have also taken note of the fact that 1MDB has had difficulties proceeding with its plan to float its power assets to raise cash. – February 23, 2015.

[…]

Payday Loans Entrap the Most Vulnerable – Roll Call


Payday Loans Entrap the Most Vulnerable | Commentary

©Reprints

By Galen Carey

As our economy continues to improve, there is a crushing weight holding many back: payday loans. While state and local leaders have taken up the cause in certain jurisdictions, this is a national problem that requires Congress to act. Unscrupulous lenders lure those who are already facing financial hardship into a debt trap from which it is very difficult to escape.

Drawn by slick marketing, desperate borrowers are induced to accept unfavorable terms they may not fully understand. The cost of a typical payday loan exceeds 300 percent annual percentage rate. By requiring full repayment from the next paycheck, payday lenders virtually guarantee that the borrower will be forced to ask for a new loan, with additional fees and interest, to pay back the old one.

This violates the underwriting standards applied to virtually every other type of loan. Payday loans perpetuate a cycle of debt, poverty and misery.

Three quarters of the fees payday lenders bring in come from borrowers, mostly low income, who have taken out 10 or more loans in a single year. More than half of all payday loans are renewed or rolled over so many times that consumers wind up repaying at least twice the amount they originally borrowed.

We have just come through the busiest season for payday lenders. Their ads promise an easy solution to the pressure of unbudgeted holiday expenses.

Parents understandably want to buy their children Christmas presents, and the lure of readily accessible extra cash masks a real threat to their financial health.

The reality is that a short-term loan almost always creates a debt that the borrower cannot repay in two weeks. Interest and fee payments balloon while the principal remains unpaid. The debt burden often continues long after the Christmas toys have been broken and discarded.

Last October, the National Association of Evangelicals addressed the devastating impact of payday loans with a resolution calling for an end to predatory lending. We are asking churches, charities, employers and government agencies to work together to help our members, neighbors and co-workers in ways that do not exploit them and lead to further misery. Other religious groups, including the Southern Baptist Convention, have made similar appeals.

The Bible prohibits usury, exploitation and oppression of those in need, and there is growing evidence that payday loans, as they are currently structured, often violate biblical justice. Predatory lenders who oppress the poor incur the wrath of God (Exodus 22:21-27). They should apply their expertise and resources to developing stronger communities rather than tearing them down.

Every family needs a rainy day fund to cover unexpected expenses from time to time. Churches should teach the spiritual disciplines of tithing and saving that position members to provide for themselves and generously care for others when special needs arise. It is our responsibility as neighbors and as churches to save and give generously, to provide the neediest among us with every possible opportunity to achieve and succeed. Churches, charities and employers should support households in their communities in times of crisis so as to prevent neighbors from being drawn into long-term debt.

In 2006, Congress passed bipartisan legislation capping the rates on loans issued to service-members at 36 percent annual interest. We need similar leadership from Congress today so that all Americans are protected from financial predators. The Consumer Financial Protection Bureau, an agency established to monitor the increasingly complex array of financial products offered to the American public, plans to unveil a new rule in coming months. We hope the bureau thoroughly investigates the payday industry and establishes just regulations and that Congress supports this process. State agencies should do the same. We need common sense guidelines such as requiring that loans be made at reasonable interest rates, and based on the borrower’s ability to actually repay.

Credit can change lives. It can be a source of opportunity or cause of devastation. How we use and safeguard this powerful tool is our choice. Caring for and lifting up our neighbors is our responsibility.

Galen Carey is vice president of Government Relations for the National Association of Evangelicals.

The 114th: CQ Roll Call’s Guide to the New Congress

Get breaking news alerts and more from Roll Call in your inbox or on your iPhone.

Want to see more political commentary and opinion stories like this? Sign up for Roll Call’s Thought Leaders Newsletter – delivered daily to your inbox!

© ReprintsGuest Observer […]

Greece requests euro zone loan extension, offers big concessions

* 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 Dijsselbloem confirms euro zone ministers to meet Friday)

By Renee Maltezou and Jan Strupczewski

ATHENS/BRUSSELS, Feb 19 (Reuters) – Greece formally requested a six-month extension to its euro zone loan agreement on Thursday, offering major concessions as it raced 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.

Euro zone finance ministers will meet on Friday afternoon in Brussels to consider the request, the chairman of their Eurogroup, Jeroen Dijsselbloem, said in a tweet.

That raised hopes of a deal to avert possible bankruptcy and a Greek exit from the 19-nation currency area.

A government official told Reuters that Athens had asked for an extension to its “Master Financial Assistance Facility Agreement” with the euro zone. However, he insisted the government was proposing different terms from its current bailout obligations.

Greece had committed to maintain fiscal balance during the interim period, take immediate reforms to fight tax evasion and corruption, and measures to deal with what Athens calls its “humanitarian crisis” and kick-start economic growth, he said.

In the document seen by Reuters, Greece pledged to meet its financial obligations to all creditors, recognise the existing EU/IMF programme as the legally binding framework and refrain from unilateral action that would undermine the fiscal targets.

Crucially, it accepted that the extension would be monitored by the European Commission, European Central Bank and International Monetary Fund, a climbdown by Tsipras who had vowed to end cooperation with “troika” inspectors accused of inflicting deep economic and social damage on Greece.

The six month interim period would be used to negotiate a long-term deal for recovery and growth incorporating further debt relief measures promised by the Eurogroup in 2012.

Euro zone partners have so far said Athens must comply with the terms of the current bailout, which require it to run a 3 percent primary budget surplus this year, before debt service payments.

Senior euro zone officials were due to hold a teleconference later on Thursday to discuss the Greek application.

The wording chosen could help to 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.

Crucial details remain to be clarified on the 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 on Greeks pulling their money out of local banks, 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 9 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 the emergency funding controlled by the ECB 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.

Euro zone finance ministers rejected Greek proposals to avoid the bailout conditions at a meeting on Monday.

German Chancellor Angela Merkel made clear on Wednesday that Athens 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 & EconomyECB […]

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.

View gallery

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 expected to seek loan extension from sceptical 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 (US$78 billion), a person familiar with the ECB talks said.

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 […]