Germany denies backing proposal for Greece to exit aid program

Germany denied it’s given support to proposals that would help Greece exit its bailout early, dealing a blow to a plan that’s already unnerved investors in the nation’s debt.

The German government issued the statement after a meeting between Finance Minister Wolfgang Schaeuble (photo) and his Greek counterpart, Gikas Hardouvelis, in Berlin on Wednesday. While they discussed progress on reforms, media reports that Schaeuble backed an early exit for Greece are incorrect, the German minister’s spokesman said on Thursday.

Greece’s Kathimerini newspaper reported on Thursday that Hardouvelis “secured the commitment of his German counterpart Wolfgang Schaeuble that Greece’s euro-zone partners would approve the country’s early exit from the memorandum with a precautionary credit line if all is in place by year-end.”

“We reject Greek media reports that Germany and Greece reached an agreement on Wednesday on further support for Greece after the end” of its bailout, Schaeuble’s spokesman, Frank Paul Weber, said in an e-mailed statement. The meeting ended “without concrete results,” he said.

Greek Prime Minister Antonis Samaras is seeking to exit its 240 billion-euro ($310 billion) bailout, which came with reform conditions that caused a political backlash. Greece is negotiating with international creditors over a precautionary credit line after the exit at the end of the year.

Hardouvelis told reporters in Berlin on Wednesday that he discussed the end of the program and that “we should enter a new relationship as of Jan. 1.”

“Germany understands that we should find a solution soon, to delineate this new relationship,” Hardouvelis said.

While euro-area support for Greece expires this year, the International Monetary Fund is scheduled to continue disbursing funds until the first quarter of 2016.

Greek government bonds fell Thursday, with the yield on the country’s 10-year benchmark note rising 59 basis points to 8.17 percent. The yield has surged from 5.8 percent two months ago on concern about Samaras’s exit strategy. [Bloomberg]

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