Eurozone to discuss another extension

Monday’s Eurogroup will discuss the possibility of another extension to Greece’s bailout program in the aftermath of Sunday’s general election, even if it is not yet certain the next government will ask for such a move.

A senior European official told Kathimerini on Friday that the council of eurozone finance ministers will examine the issue of further extending the existing program “from six months up to the end of 2015,” given that the time left is very small – the current extension provides for the program to end on February 28.

For another extension to be granted, it will have to be requested by the Greek government first. So far officials in Brussels do not know what SYRIZA leader Alexis Tsipras will ask from his European peers should he form the next government.

The representatives of the European Commission will present Greece’s funding needs within 2015 at Monday’s Eurogroup. The eurozone is aware that Greece’s main payment requirement this year concerns 7 billion euros in maturing bonds. However, without having completed the assessment on which the last installment of 7.2 billion euros is dependent, Athens will simply be unable to pay its dues.

That is why it was implied at the latest Euroworking Group meeting that Greece may have to make use of an 11-billion-euro safety cushion held by the HFSF bank bailout fund, which is currently destined to constitute a precautionary credit line, in order to pay its dues. That process will not be so simple though, as it will require the consent of all 19 eurozone member states and entail a new, third loan as fresh cash will be needed for the credit line to follow.

That cash will be disbursed on certain conditions that Greece must agree to, while it is very likely that some northern eurozone members, such as Austria, Finland, Germany and the Netherlands, will object.

What is clear is the message to Greece that is coming out of Brussels, which has been the main idea of all statements from eurozone officials since the start of the election period: “Fulfill your commitments first and then we can hold discussions.”