Greece fails in bid for early cash release, reforms awaited

Athens had appealed for the European Financial Stability Facility to return 1.2 billion euros it said it had overpaid when it transferred bonds intended for bank recapitalization back to the Luxembourg-based fund this month.

But senior Eurozone officials agreed in a telephone conference on Wednesday that Greece was not legally entitled to the money, although they said they would consider how to deal with the issue in the future.

The decision by the Euro Working Group was a setback for leftist Prime Minister Alexis Tsipras, who is struggling to secure fresh funds to keep his government afloat while he presents a comprehensive reform plan and argues for debt relief.

A source familiar with Greece’s financial position told Reuters on Tuesday Athens would run out of money on April 20 without new cash.

EU paymaster Germany, to which Tsipras made a fence-mending visit this week after weeks of acrimony between Athens and Berlin, was among the countries that opposed handing back the 1.2 billion euros.

«We see no reason to release it,» German Finance Ministry spokesman Martin Jaeger told a routine news conference, adding that EFSF funding was made available to Greece last year as a safeguard during bank stress tests but had not been needed.

Jaeger said euro zone finance ministers decided last month, when they extended Greece’s bailout agreement, to transfer that money back to the EFSF in Luxembourg where it would be available for bank recapitalization should Greece need it in future.

The German stance made clear that despite the improved atmosphere in relations between Tsipras and Chancellor Angela Merkel, Berlin has not softened its position in substance.

Tsipras has promised to deliver a full list of planned reforms by next Monday, but it is not clear whether it will include measures agreed by the previous conservative-led government such as privatizations and pension reform.

Euro zone officials have said it will be hard for Athens to make the budget numbers add up without a forecast 4 billion euros due from the sale of state assets this year and savings through later retirement and a merging of pension funds.

However, both reforms are bitterly opposed by Tsipras’ leftist SYRIZA party, and ministers have already halted several planned privatizations.

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