Six-Month Extention in Greek Program Under Consideration, New Review Deadline on December 14

The possibility of extending Greece ‘s bailout program by six months, to mid 2015, is being considered by the Eurozone Finance Ministers, according to a document obtained by Reuters, while Athens insists it is only discussing an extension of a few weeks.

The scenario of a six-month extension into the new year is highly unpopular among the Greek government and such a development would complicate Prime Minister Antonis Samaras‘ efforts to secure victory over the upcoming Presidential vote in February. Ruling New Democracy’s communication strategy has lately been based on the precocious exit from the EU/IMF bailout program by the end of the year. ” Greece has not received any written proposal on an extension. In any case, everything that the Prime Minister and Finance Minister Gikas Hardouvelis have said stands, that Greece can only discuss a technical extension, which cannot be longer than a few weeks,” an unnamed Greek government official told Reuters.

The bailout extension is considered necessary by the country’s lenders as their negotiations with Athens have reached a dead-end and only a little progress has been made during the last weeks over what the Greek side must do to receive the final 1.8-billion-euro installment – of the 240-billion-euro package enforced in 2010 – in order to secure the proclaimed preventive credit line after the bailout ends and return to market financing.

Athens’ intention to complete its bailout review by Saturday’s Eurogroup meeting looks unreal now, as the talks have been significantly delayed due to a budget shortfall next year and Eurozone officials have now set the December 14 Euro Working Group (EWG) as the new deadline for the country to reach a deal with its lenders. “Although the purpose of the technical extension would be to give more time to Greek authorities to prepare legislation for adoption in January 2015, the extension could be for a longer period to cover for the possibility of delays in the run up to the Greek Presidential election. In this respect, an extension until the end of Q2 2015 seems appropriate, with the central scenario assuming a staff level agreement before the December 8 Eurogroup, completion of all prior actions by mid-January, a final disbursement from the European Financial Stability Facility (EFSF) and a completion of the Enhanced Conditions Credit Line (ECCL) procedures before the end of January,” the document, prepared for Eurozone Ministers, said.

This was also confirmed by the EWG meeting held today in Brussels. According to Greek Finance Ministry sources, the EWG recognized that the gap between the Greek government and the Troika of creditors has been bridged over the last days and it strongly urged that both sides reach an agreement on a technical level by December 14.

Prime Minister Samaras and government Vice President and Foreign Minister Evangelos Venizelos will hold a meeting tomorrow at 9:00 am at the government headquarters, during which the crucial December 8 Eurogroup and the arrival of the Turkish Prime Minister Ahmet Davutoglu in Athens will be discussed.