Greece handed the European Central Bank an excuse to maintain the life support for its financial system by persuading its skeptical German-led creditors it’s serious about delivering the policies needed to escape a default.
Less than three weeks after a Greek aid meeting broke up in taunts and acrimony, Finance Minister Yanis Varoufakis assured euro-area governments that his country is aiming to strike a bargain to win the final installments of its 240 billion-euro ($268-billion U.S.) aid program.
Pressure on the two sides had intensified with the ECB due to reassess the emergency liquidity lines keeping the Greek banking system in business on Wednesday. Although some central bankers are pushing for stricter terms, it’s now unlikely that policy makers will decide to restrict funding this week, according to two European officials.
With global bond markets sliding, the yield on Greece’s notes due 2017 rose 17 basis points to 21.4% by noon local time. The Athens benchmark stock index was little changed.
Greece said it will surmount another hurdle this week, when it repays about 750 million euros to the International Monetary Fund. A transfer order was put in Monday, two Greek officials said. More payments to the IMF and the redemption of bonds held by the ECB beckon between now and September, though Varoufakis suggested Greece may not get that far without help.
Monday’s accord brought Greece back to where it was on Feb. 20, when Prime Minister Alexis Tsipras’s freshly installed government committed to the budget targets he had scoffed at during the campaign. In return, Greece was granted a bailout extension until the end of June, giving it time to adjust economic policies.
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