Another bailout extension on the cards

Greece’s creditors are examining the option of a further extension to the Greek bailout program beyond February 28, knowing that it will be impossible for the tough negotiations that have remained open since September to be brought to a successful conclusion by that time no matter what government emerges from the January 25 snap election.

Finance Minister Gikas Hardouvelis said on Monday that “the time frame, if the same government remains in power, will suffice as it knows exactly what it has to do. If there is a new government, we will need to get an extension in February for it to get to know what to do.” He went on to repeat that the existing cash reserves can cover state needs up to March.

The response from troika representatives to the prospect of the election next month concerned the suspension of negotiations until a new government is formed, while implying that the creditors would not be getting involved in political developments within Greece.

“Discussions with the Greek authorities on the completion of the sixth review of the program will resume once a new government is in place, in consultation with the European Commission and the European Central Bank,” International Monetary Fund spokesman Gerry Rice said. He further assured that the holdup in the program would not affect the country’s finances in the short term. “Greece faces no immediate financing needs,” he said.

An ECB statement said it would “wait for the opinions and proposals of the Greek authorities as to how to proceed in the best possible way to the assessment.”

A European official told Kathimerini on Monday that if the next government is formed by incumbent Premier Antonis Samaras, an extension of two to three months will be easily granted, adding that if it is opposition SYRIZA that comes to power, things will be complicated.

Any extension request will have to take into account the reaction of certain eurozone members, such as Finland, which has a general election coming up in April. Finland had the greatest objection to the two-month extension given to the Greek bailout program, and it would certainly not wish to have Greece as an open issue during its election period.