The Economy

Greece Will Seek Loan Extension: WSJ

To avoid draining the government and banks of liquidity, Greece will request an extension on its euro zone bailout, says its finance minister.
Katie Kuehner-HebertFebruary 17, 2015
Greece Will Seek Loan Extension: WSJ

According to the Wall Street Journal, Greece will seek an extension to its bailout deal from the rest of the euro zone.

Talks had collapsed again between Greece and European Union Commission finance ministers, after Greece’s new leftist-led government rejected the EU’s demand that it stick to the plans laid out in the 240 billion euro ($272.4 billion) bailout package. EU finance ministers had called for Greece to agree to a six-month extension, according to a Reuters story, without any other revisions to the terms of the bailout.

But the Greek government sought further concessions, saying the bailout terms were harming the country’s economy.

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On Tuesday, however, Greek Finance Minister Yanis Varoufakis told the WSJ in a phone interview that he expects an agreement between Greece and the euro zone on an extension of the existing rescue package.

Time had been running out for Greece to prevent a severe cash crunch for the government and the country’s banks.

“How long Greece can keep itself afloat without foreign support is uncertain,” Reuters wrote.

Malta finance minister Edward Scicluna said that “Greece has to adjust, to realize the seriousness of the situation, because time is running out,” according to Reuters.

Greek banks continue to bleed cash at an increasing rate, Reuters wrote. At the current pace, JPMorgan Chase told Reuters, Greek banks have just 14 weeks before they run out of collateral with which to obtain funds from the central bank, which would likely then impose capital controls.

After the talks stalled on Monday, the euro fell nearly a U.S. cent, though rose to close at $1.1350, down 0.5%. By Tuesday afternoon the euro had strengthened against the dollar, to $1.14.