Greece airs idea of bailout extension ahead of leaders’ talks

Greece’s lenders urged the government to come to an agreement swiftly on Wednesday as Athens proposed the extension of the country’s bailout program by nine months, until March 2016.

A Greek official speaking on the sidelines of a summit in Brussels between leaders from the European Union and Latin America said that the government would consider an extension of the program if lenders also agreed to provide funds from the European Stability Mechanism and buy the Greek government bonds that the European Central Bank purchased on the secondary market through its SMP scheme.

The ECB holds a total of 27 billion euros in SMP bonds and Athens believes that withdrawing them will reduce its funding needs over the months to come.

Greece also wants its lenders to make available again some 11 billion euros that had been destined for bank recapitalization but which Athens had to return to the ESM in February.

However, ahead of a late night meeting between Greek Prime Minister Alexis Tsipras, German Chancellor Angela Merkel and French President Francois Hollande, the government and its creditors had yet to settle differences over issues such as Greece’s primary surplus targets for the coming years. A government official rejected reports that Athens had agreed to creditors’ demands for a 1 percent of GDP surplus target for this year. Athens has proposed 0.75 percent.

Ahead of the tripartite meeting, Merkel stressed that Greece must reach a deal with its creditors and stop seeking a political agreement to bypass reforms. “The message will be: You’ve got to continue negotiations with the three institutions,” she said.

Hollande emphasized the lack of time. “We must now move quickly, we must not relent, we must not allow solutions that would be bad for Greece, for the European Union and for the eurozone,” he said.

European Commission spokesman Margaritis Schinas made it clear that creditors were waiting for Greece to make the next move. “For this final push, the Commission is of the view that the ball is now clearly in the court of the Greek government,” he told a news briefing in Brussels.

Eurogroup President Jeroen Dijsselbloem said Greece and its creditors can still reach a deal in time for the next meeting of eurozone finance ministers on June 18. He said only a few issues remained to be solved but noted that Greece’s revised proposals were inadequate. “We are still open to serious alternatives, but the alternatives of the last couple of days have not been of a high enough standard,” he said. In talks last week with Tsipras and European Commission President Jean-Claude Juncker, “we made quite clear that there is room to put in alternative measures,” he said, adding however that “the bottom line is that it has to add up, because Greece has to become financially independent again.”