Greece creditors offer five-month bailout extension

Greece’s international creditors on Friday offered Athens a five-month, 12-billion-euro ($13.4-billion) extension of its bailout programme but said it must seal a deal this weekend to avoid an IMF default next week.

German Chancellor Angela Merkel urged Athens not to waste an “extraordinarily generous” offer that would see Greece handed vital cash until November 30 in exchange for major reforms Greece has so far resisted.

But Greek Prime Minister Alexis Tsipras said he refused any take-it-or-leave-it offers from his EU partners and vowed to remain true to his anti-austerity principles despite the financial abyss looming just days away.

“Europe’s principles are not based on blackmail and ultimatums,” Tsipras said after a two-day EU leaders summit dominated by the Greek debt crisis. “In these crucial hours, nobody has the right to put these principles at risk.”

Tsipras spoke after a short meeting with Merkel and France’s Francois Hollande on the eve of a “decisive” meeting of eurozone finance ministers aimed at finding a deal to end the crisis.

The eleventh-hour offer followed a week-long series of talks to end the stand-off between the creditors and Tsipras’s leftist government, which has balked at further reforms-for-cash after five years of economic hardship.

According to the proposals seen by AFP, the creditors are ready to quickly disburse 1.8 billion euros in financial aid to help Athens meet a 1.5 billion euro IMF debt repayment due on June 30 as long as the Greek parliament approves disputed reforms.

German Finance Minister Wolfgang Schaeuble said the chances for a deal stood at about “50-50”.

Eurozone stock markets pushed higher on news of the new offer for Greece.

– Tsipras slams ‘harsh’ offer –

In their short meeting, Tsipras told Merkel and Hollande he could not understand their “harsh” stance and asked for leeway.

But the eurozone’s two most powerful leaders insisted that Saturday’s eurozone meeting was “crucial and decisive and that it was vital now to work towards a deal,” a source said.

Syriza party leader Tsipras was elected in January on an anti-austerity platform and has resisted the creditors’ demands for pensions cuts and VAT hikes in return for unlocking bailout funds

An extension to Greece’s massive 240 billion-euro bailout to the end of November would be the third since December and allow more time for heavily indebted Athens to negotiate future financing from its European partners.

Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers, said a deal had to be clinched on Saturday or there would not be enough time for it to get parliamentary approval.

“Tomorrow it really has to happen, for the simple reason that it has to go through parliament, first the Greek then of several member states,” the Dutch finance minister told journalists in The Hague.

The proposal by the three main creditors — the European Commission, ECB, and International Monetary Fund — said a “five-month extension of the current programme … would be feasible during which a total of 12 billion euros of financial support would be provided.”

An immediate 1.8 billion euro disbursement — profits from Greek bonds held by the European Central Bank — would be paid “as soon as the Greek parliament has approved with a resolution the agreement with the (creditor) institutions and adopted a first set of legislative actions.”

Later payments, including money to cover huge payments owed the ECB this summer, would come from the EU’s firefighting rescue fund, the European Stability Mechanism, as well as cash currently dedicated to support Greece’s banks.

– Warnings of ‘chaos’ –

The plan has already been sent to German parliament members who will vote on the measures if the Greek government accepts the deal on Saturday, sources said.

The IMF could also contribute to the bailout extension, but only if certain conditions are met, underscoring differences between Europe and the Washington-based lender which wants Greece’s huge debt mountain to be reduced.

Greece also wants debt cut as part of a solution to the five months of bitter negotiations over the unlocking of the final 7.2 billion euro ($8.1 billion) payout from its current extension, which expires on June 30.

The stakes could not be higher.

“Every day that passes brings us closer to the inevitable … a form of chaos, of disorder,” French Finance Minister Michel Sapin said.

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