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Greece gets extra time to pay debts -- but no more money

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People hold sacks of potatoes during a food distribution organised by the Greece's far-right Golden Dawn party at Agios Panteleimonas Square in Athens. Photo: Reuters

People hold sacks of potatoes during a food distribution organised by the Greece's far-right Golden Dawn party at Agios Panteleimonas Square in Athens. Photo: Reuters

People hold sacks of potatoes during a food distribution organised by the Greece's far-right Golden Dawn party at Agios Panteleimonas Square in Athens. Photo: Reuters

GREECE will get additional time to repay its debts to international lenders but will not get more money, according to Austrian Finance Minister Maria Fekter.

Asked if Athens would get a payment extension, she said: "Yes. We are still awaiting the troika report and Greece still has to get some things on track but we will achieve a cost-neutral extension."

The comments in an interview with the 'Oesterreich' newspaper printed yesterday are a further sign that the mood towards Greece is mellowing despite the country's inability to agree to further cuts.

Officials from Germany and the Netherlands have recently echoed the IMF in speaking of extending the deficit-cut timetable, making Greece the latest beneficiary of a European tilt against austerity that gained strength with the election of Socialist French President Francois Hollande in May.

A deal along these lines would mirror the sort of deal that Finance Minister Michael Noonan is trying to reach with European leaders. Mr Noonan has said repeatedly that he wants more time to repay Irish debt but does not want any writedown.

Mrs Fekter was referring to a report being compiled by the European Commission, IMF and ECB on how well Athens is fulfilling terms on its international rescue package.

Athens is way behind on its debt-cutting programme but most finance ministers meeting in Cyprus on Friday and Saturday appeared to move away from suggestions that Greece should be allowed to go bust.

International lenders were likely to reach final decisions on the revised financing programme for Greece in the second half of October, Greek Finance Minister Yannis Stournaras said yesterday.

Officials calculated that a confrontation with the Athens government would drive it further off track and shatter newfound market confidence in the management of the crisis that has lasted almost three years.

Opposition

Creditors led by Germany and the IMF may now grant Greece more leeway to narrow its deficit after their austerity-first policy helped mire the country in a fifth year of recession, and two Greek elections produced a shaky governing alliance of pro-euro politicians under constant attack from the anti-bailout opposition.

"Greece has already produced a huge effort but will have to continue to do so," IMF managing director Christine Lagarde said in Nicosia, the Cypriot capital. "There are various ways to adjust. Time is one. That needs to be considered as an option."

The softening of the European and IMF approach follows the rise of Greek anti-bailout party Syriza, which overturned four decades of political dominance by New Democracy and Pasok in May and June elections to become the second party in the parliament. (Additional reporting Bloomberg and Reuters)

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