Tuesday 17 October 2017

Germany stuns markets in rejecting Greek offer for bail-out extension

People use an ATM as a homeless man sleeps outside a bank in Athens (AP Photo/Thanassis Stavrakis)
People use an ATM as a homeless man sleeps outside a bank in Athens (AP Photo/Thanassis Stavrakis)

Press Association

Germany has responded coldly to Greece's extension request.

Finance ministry spokesman Martin Jaeger said the letter from the new Greek government "is not a substantial proposal for a solution".

He says that it amounts to a request "for bridge financing without fulfilling the demands of the (bailout) programme".

Germany, a key creditor, has insisted that aid for struggling countries must come with strings attached.

Mr Jaeger added that the letter from Greece does not correspond to criteria agreed by the eurozone countries.

Earlier today, Greece has sent its proposals to break a deadlock with European creditors over its frozen bailout programme and end uncertainty over the debt-heavy country's future in the euro.

Read more: Greece formally requests six month euro zone loan extension

Dutch finance minister Jeroen Dijsselbloem, who heads the meetings of eurozone finance ministers, said he received a Greek request "for a six-month extension".

An EU official said a meeting of the 19 eurozone finance ministers would take place in Brussels on Friday.

Athens has said it will request an extension of the loan programme that has kept it from bankruptcy since 2010.

Crucially, however, it is unclear to what extent the weeks-old radical left-led government will accept to continue the spending cuts, high taxation and reforms that have been a key condition of the bailout programme.

Greek shares rose 2pc on the news in morning trading, while the Euro Stoxx 50 index was flat.

Government spokesman Gavriil Sakellaridis said that Greece is doing everything it can to reach a speedy and mutually acceptable deal with the other 18 European countries that use the euro.

But he insisted that the new government would not accept further austerity measures to secure continuation of the bailout support the country needs.

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