French nod on extension

French President Francois Hollande said on Tuesday that a Greek request for a two-year extension to its fiscal adjustment period could be granted if the country?s foreign creditors issue a positive report on Athens?s attempted economic overhaul, while German Finance Minister Wolfgang Schaeuble struck a sterner tone, noting that the priority was for Greece to implement promised reforms.

In a welcome lift for Greece, Hollande repeated an earlier-stated conviction that the two-year extension sought by Athens for the implementation of austerity measures could be granted as long as this does not oblige eurozone countries to shell out more loans.

In a joint press conference with Italian Prime Minister Mario Monti in Rome, Hollande said the green light for an extension would depend on a positive report. ?Then, without giving any more money, we can reimplement the program and keep Greece in the eurozone,? he said.

The mood in Berlin was more skeptical. Stournaras set out Greece?s positions to Schaeuble, presenting the government?s draft proposal for 11.5 billion euros in cuts for 2013 and 2014. ?Most important is that Greece fully implement its obligations. Finance Minister Schaeuble pointed this out to his colleague once again,? the German Finance Ministry said, adding that a report by Greece?s ?troika? of foreign lenders — the European Commission, European Central Bank and International Monetary Fund — was due in October. Stournaras and Schaeuble reportedly discussed Greek efforts to hammer out a new austerity package, the impact of an ever-deepening recession and the request for a two-year extension.

Stournaras, who also met with German Foreign Minister Guido Westerwelle, has reportedly set up a working group to conduct a study into the viability of Greece?s debt.

The minister is due back in Athens on Wednesday as coalition officials continue efforts to finalize an 11.5-billion-euro austerity package that he has drafted but which the junior coalition partners have doubts about. The package must be approved by Prime Minister Antonis Samaras and his coalition partners before getting the endorsement of troika envoys, who are due in Athens on Friday. After meeting troika officials, Samaras is to travel to Frankfurt next Tuesday to meet ECB chief Mario Draghi for talks on the possible purchase of Greek bonds by the bank and the recapitalization of Greek banks.

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