Greece and Eu Vow to Keep Talking

By Gabriele Steinhauser And Viktoria Dendrinou 

        BRUSSELS--Eurozone finance ministers struggled to find a clear line on how to deal with Greece's financial issues early Thursday in light of what they said were mixed messages from the new government in Athens.
        After more than six hours of negotiations, the ministers--along with the heads of the International Monetary Fund and the European Central Bank--pledged to keep talking in the coming days with the hope of coming up with a plan at their next meeting.
        In an unusual development for their get-togethers, the ministers failed to agree on a joint statement, despite what officials said were three rounds and several hours of extensive drafting.
        "We had an intense discussion...also making some progress, but not enough progress at this point to come to joint conclusions," said Jeroen Dijsselbloem, the Dutch finance minister who presides over talks among his eurozone colleagues.
        Greek Finance Minister Yanis Varoufakis said he still hoped that a deal on new financing for his debt-stricken country could be found by next week.
        "We heard many different, interesting opinions, we had the opportunity to take a lot of views," he said after the meeting. "Now we are proceeding to the next meeting on Monday hoping that there will be conclusions in a manner that is optimal for both Greece and our European colleagues."
        What such a deal might look like, however, remained unclear. The biggest disagreement at Wednesday's talks was over whether Greece should request an extension of its existing EUR240 billion ($272 billion) bailout, which runs out at the end of the month. The antiausterity government of Prime Minister Alexis Tspiras is resisting such an extension, saying the cuts and overhauls it requires will push the country's economy further into crisis.
        Greece's international creditors, meanwhile, believe extending the current rescue program is the best way to keep the country from defaulting until a follow-up deal has been agreed.
        "We discussed the possibility of an extension," Mr. Dijsselbloem said. "For some it was clear that this was the preferred option, but we haven't quite come to that conclusion yet."
        Time to find a deal is tight. Once Greece's rescue deal expires on Feb. 28, it loses its claim to some EUR3.7 billion in remaining aid from the eurozone, along with around EUR11 billion still sitting in its bank bailout fund. Loans from the IMF, whose program for Greece runs until 2016, will also become locked, since they depend on parallel support from Europe.
        Greek officials, meanwhile, have said that the government risks running out of money in early March, especially if tax revenues shrink further. Already, Greek banks can no longer use their government's bonds to get liquidity from the ECB, depending instead on more-expensive emergency funding from their own central bank.
        Many officials and analysts fear that more citizens and businesses could withdraw deposits from Greek lenders if the bailout ends without a clear follow-up plan, potentially triggering a bank run.
        Last week, Mr. Varoufakis told Parliament in Athens that the government wanted to secure a new rescue deal with the eurozone by Sept. 1, including cuts and overhaul measures that it believes will be less harmful to the Greek economy.
        How Greece plans to pay its bills until then remains up in the air. Between the beginning of March and the end of August, Greece has to repay EUR4.7 billion in old IMF loans and EUR6.6 billion in bonds held by the ECB and national central banks. On top of that, it faces interest payments to private creditors, the fund and the eurozone, and has to roll over EUR13.4 billion in short-term debt, so-called treasury bills.
        Ideas voiced by Greek officials over the past weeks--including permission to sell more t-bills and receiving a slice of its current bailout without implementing new austerity measures--have been rejected by the ECB and others.
        Many finance ministers, including Germany's Wolfgang Schäuble, have continued to insist that new help could only come if Greece implements promised budget cuts and economic overhauls.
        "We have this program, and this program either has to be concluded in an orderly manner or we won't have a program," Mr. Schäuble said when he arrived in Brussels Wednesday.
        Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com and Viktoria Dendrinou at viktoria.dendrinou@wsj.com
        (END) Dow Jones Newswires

        February 11, 2015 19:27 ET (00:27 GMT)

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