Eurozone ministers on Monday approved a request from Greece for a two-month extension to its bailout program that was set to end December 31, amid an ongoing budget row between Athens and its EU-IMF creditors.
“The Eurogroup would be favorably disposed to a request by Greece for a technical extension of 2 months of the current EFSF program,” the Eurogroup of ministers said in a statement, referring to the European Union’s rescue fund.
The decision comes a day after violent protests in Athens and a high-stakes budget vote in Greek parliament revived memories of the debt crisis that nearly sank the euro.
A new line of credit became urgent after Athens proposed in October to break free completely of financial oversight.
This spooked the markets, which sent Greek borrowing rates to dangerously high levels.
But a new credit line for Greece would require the previous bailout to be completed or terminated, and with a bitter row between the government and the creditors still ongoing, this seemed unlikely before December 31.
Before the talks, the influential German Finance Minister Wolfgang Schaeuble downplayed the difficulty of approving the extension.
“If we need another extension, it wouldn’t be the first time,” Schaeuble said, while adding that Greece must remain on the path of reform.
As protests raged outside, the Greek parliament late Sunday passed the disputed budget for 2015 based on growth and deficit figures that Greece’s “troika” of creditors — the European Commission, European Central Bank, and International Monetary Fund — regard as too optimistic.
Agreement on the budget is required in order for Greece to receive the final 1.8 billion euro installment of its huge bailout that has totalled a whopping 240 billion euros ($294.8 billion) in rescue loans since 2010.
The payment should be delivered to Greece this month, but Prime Minister Antonis Samaras — hit by the protests as well as a political threat from the resurging far left Syriza party — has refused to yield in the budget fight, holding up the end of the bailout program.
The greenlight by the ministers now requires a fast track approval by member state parliaments before the end of the year.