04 February 2015

Reuters: Greece seeks ECB funds, Germany rejects austerity roll-back

Finance Minister Yanis Varoufakis said after meeting ECB President Mario Draghi in Frankfurt he believed Athens could count on central bank support during the short period it would take to conclude talks with international lenders.

Banking sources told Reuters that two Greek banks have begun to tap emergency liquidity assistance from the Bank of Greece after an outflow of deposits accelerated after the victory of the hard left Syriza party in a general election on Jan. 25.

The Greek government wants that funding to continue because if the ECB were to halt it, Greek banks could collapse, forcing the country out of the euro zone. 

Promising to end five years of austerity, Prime Minister Alexis Tsipras and Varoufakis are meeting senior officials across Europe to seek support for a new debt agreement.

However a document prepared by Germany for a meeting of EU finance officials on Thursday made clear Berlin wants Athens to go back on promises to raise the minimum wage, halt unpopular sales of national assets, rehire fired public sector workers and reinstate a Christmas bonus for poor pensioners.

"The Eurogroup needs a clear and front-loaded commitment by Greece to ensure full implementation of key reform measures necessary to keep the programme on track," the document, seen by Reuters, said in reference to euro zone finance ministers.

"The aim is the perpetuation of the agreed reform agenda (no roll back of measures), covering major areas as the revenue administration, taxation, public financial management, privatisation, public administration, health care, pensions, social welfare, education and the fight against corruption." 

The new Greek leaders have had a cautious reception so far, even in left-leaning countries such as France and Italy which Athens had hoped would support its case for debt relief.

French President Francois Hollande said the euro zone's rules applied to everyone. 

European Council President Donald Tusk said after meeting Tsipras in Brussels that any solution must be acceptable to all member states, a veiled reference to Germany, Greece's biggest creditor which takes the hardest line on fiscal discipline.

"NO DOUBT"

Tsipras, 40, said after talks with European Commission President Jean-Claude Juncker that Greece respected European Union rules and would find a solution to its economic problems within the framework of EU law. There was no agreement yet, but talks were going in the right direction, he said.

After meeting Draghi, Varoufakis told Reuters: "The ECB is the central bank of Greece ... The ECB will do whatever it takes to support the member states in the euro zone."

Full article on Reuters

 

Financial Times: ECB resists latest Greek bailout plan

The ECB is resisting a key element of the new rescue plan, potentially leaving Athens with no source of outside funding when its international bailout expires at the end of the month.

Yanis Varoufakis, Greek finance minister, had proposed to European officials that Athens raise €10bn by issuing short-term Treasury bills as “bridge financing” to tide the country over for the next three months while a new bailout is agreed with its eurozone partners.

But the ECB is unwilling to approve the debt sale. It will not raise a €15bn ceiling on t-bill issuance to $25bn as requested by Athens, according two officials involved in the deliberations. “The Greek plan relies fully on the ECB,” said another eurozone official briefed on the talks. “The ECB will play hardball.”

Without T-bill financing, Athens will exit its bailout without access to emergency funding for the first time since the first Greek bailout began in May 2010. 

Full article on Financial Times (subscription required)

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