Germany Rejects Greece's Request for Loan Extension

Nigel Thomas
19 Feb, 2015
New York City

Germany rejected immediately the loan extension proposal requested by Greece and finance ministers in the euro zone are scheduled to meet on Friday.

Germany rejected immediately the loan extension proposal requested by Greece before the Friday’s deadline set by the Eurogroup of finance ministers in the euro zone.

Greece in a legal language 2-page letter requested a loan extension and reaffirmed its commitment to meet debt payment but for many fell short and did not go far enough on its promise to implement austerity measures and reform bureaucracy.

Greece is behind in it tax collection by at least one billion euros in January and the government is expected to run out of cash at the end of this month. Without the loan extension, Greece is likely to default on its international loans.

“The written document does not meet the criteria agreed in the Eurogroup on Monday,” German Finance Ministry spokesman Martin Jaeger said in a statement.

The Greek proposal calls for loan extension for six months but requests another set of “different terms,” Gavriil Sakellaridis, A Greek government spokesman said today.

However, German Finance Minister Wolfgang Schaeuble is still scheduled to meet other ministers in the Eurogroup on Friday to discuss the proposal.

Germany is likely to play central role in the meeting on Friday, third to discuss the response of the international lenders.

Without the loan Greece’s government and banks are likely to shut out of the international bond market and the state is going to run out of cash as early as a week in the next month.

Cautious bond investors are still hopeful of a last minute accord by the end of the month as Greece runs out of option and avoid the possibility of leaving the currency union.