The Greek government asked for a 9-month-long extension to the current program that ends on June 30 under new terms and with new reforms. The goal is to reboot the stalled Greek economy with funds from the European Financial Stability Facility (EFSF) and debt exchange between the European Stability Mechanism (ESM) and the European Central Bank (ECB). This would ensure that there are funds even if the International Monetary Fund (IMF) doesn’t give any of the installments expected by March 2015.
The 9-month extension has yet to be approved by Greece’s creditors, however would mean that the pre-election promises of the Radical Left Coalition (SYRIZA) would need to be postponed.
Government sources in Athens said the extension was requested so that Greece would not be cornered should a deal for new reforms not be agreed to by the end of the month. More funding would not be sought from creditors, but there would be new “tools” in the current program for Greece to be able to cover its funding needs worth 25-30 bln euros. Without giving additional funds or new loans to be authorized by foreign parliaments seeking harsher bailout terms, creditors will monitor the country until March 2016.
The Greek proposal states that even if the IMF doesn’t offer funds to Greece, the country will be able to continue operating with the following funds:
– 3.8 bln from European installments
– 6.5 bln euros in debts to the ECB that need to be paid this year will be transferred to the ESM
– 10.9 bln from the Hellenic Financial Stability Fund
– 1.2 bln will be returned from the ECB
– 1.9 bln euros in profits from Greek bonds will be returned by European central banks
– around 1.5 bln euros will be given from European central banks from profits for Greek bonds in 2015
– 2-3 bln euros from the increase to the limits for loans through T-bonds
– 2-3 bln euros from provisional issues of new bonds
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