Germany has rejected Greece's application to extend its loan agreement and renegotiate the terms of its bailout, raising the very real threat of Athens running out of money in the coming weeks.
The Berlin government said on Thursday that Greece's application for a six-month extension of its loan and a renegotiation of some of its terms was "no substantial solution."
"In truth it goes in the direction of a bridge financing, without fulfilling the demands of the program. The letter does not meet the criteria agreed by the Eurogroup on Monday," German finance ministry spokesman Martin Jaeger said in a statement.
Earlier in the day, Athens formally requested to prolong its "master financial assistance facility agreement."
In the proposal, the left-leaning Syriza Party had offered a series of concessions to its previous hardline stance that it would unilaterally scrap the austerity measures imposed as part of the country's 240 billion euro ($270 billion) bailout. It pledged to work with the European Union and the International Monetary Fund in reworking the terms of the bailout and to not make any unilateral decisions when it came to the terms of the austerity package.
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The Eurogroup of finance ministers from the 19 countries that use the single currency is due to meet on Friday to discuss the Greek plan. There has to be unanimous agreement among the group for any policy decision to go ahead.
The current program—which included the EU and IMF as creditors—was due to expire in little more than a week. Without further funds, Greece would soon run out of money raising the prospect of a default on its bonds and a possible exit from the euro zone.