Greek financial lifeline extended as Brussels, Athens wrestle over austerity

FRANKFURT – European finance ministers on Monday gave bailed-out Greece a two-month extension of its financial lifeline as they argue about whether Athens should impose more budget austerity to meet conditions for the last installment of aid.

Jeroen Dijsselbloem, head of the group of finance ministers from countries that use the euro, said after the meeting in Brussels that the group would say yes to a request from Greece to push its current bailout deal into next year.

Greece’s current bailout program was slated to run out at the end of the year and the country was to switch to a standby credit line with less onerous conditions. But its latest budget has failed to pass muster with international creditors. That means Greece hasn’t been able to pass the final review of its compliance with its rescue package and tap the last bailout loan installment of 1.8 billion euros ($2.2 billion).

Greece was rescued from a financial and economic crisis with the help of 240 billion euros ($297 billion) in loans from other eurozone governments and the International Monetary Fund. The country also defaulted on government bonds.

Greek Prime Minister Antonis Samaras is eager to reach the end of the aid program as the country recovers economically because the loans came with politically unpopular conditions.

Greece has had to restrain government spending and raise taxes to try to reduce debt. Samaras said the European Commission and IMF argue that the country’s current budget has a 1.7 billion euro hole that must be filled with more cuts — a position Samaras rejects.

Samaras faces the possibility of new elections next year where he would compete against the left-wing Syriza party, which has denounced the bailout deal.