Germany rejects loan request saying Greece must meet conditions [Update]

Germany rejected Greece’s request for an extension of its aid program, saying its offer doesn’t meet the euro region’s conditions for continuing aid.

The Greek government is trying to agree bridge-financing without meeting the conditions of its existing rescue program, German Finance Ministry Spokesman Martin Jaeger said in an e- mailed statement. European Commission Spokesman Margaritis Schinas moments earlier had said the Greek letter could be the basis for a “reasonable compromise.”

The euro dropped 0.3 percent to $1.1358.

With the Greek state and its banks shut out of financial markets and dependent on emergency aid to stay afloat, Prime Minister Alexis Tsipras is retreating from his pledges to end austerity as the country’s creditors tighten the financial vise.

Tsipras’s government in a letter to fellow euro member states offered to work for the “successful conclusion and review” of the current financing agreement with creditors in a bid to avert a cash crunch.

Euro-region finance ministers will make a “detailed assessment” of the request and formulate a response, Schinas said at a press conference in Brussels Thursday. Ministers are due to meet on Friday.

During the extension “we shall proceed jointly, and making best use of given flexibility in the current arrangement, toward its successful conclusion and review on the basis of the proposals of, on the one hand, the Greek government and, on the other, the institutions,” Finance Minister Yanis Varoufakis said in the letter.

Varoufakis said the extension will allow Greece to agree on supervision by the European Union, the European Central Bank and the International Monetary Fund and discuss a new contract.