Confusion over Greek claim of bailout extension

Germany's Finance Minister Wolfgang Schäuble labelled the statement as 'speculation'

Greek workers protest against planned changes to their pensions (Reuters)

The cacophony in Europe over Greece grew yet louder as Athens and some of the Continent's economic leaders contradicted each other over an elusive agreement between the recession-hit country and its creditors.

Greece's Finance Minister Yannis Stournaras said the country had finally agreed the terms of a new austerity package with its lenders and had been graced with a much-coveted extension to its bailout targets, which was later all resoundingly dismissed by European officials.

Mr Stournaras told MPs yesterday that Athens had been granted an extension to implementing its economic programme to spread the cuts over an additional two years, until 2016. "What did we achieve today? We achieved an extension," Mr Stournaras said in parliament.

Under the terms of the current loan agreement, Athens is expected to implement €13.5bn (£10bn) of cuts in 2013-14. Nearly half of them would be drawn from reductions in pensions and wages and €9.2bn needs to be cut in 2013 alone. "If we hadn't achieved the extension, today we would not only be taking €13.5bn measures, but €18.5bn instead," Mr Stournaras said.

But Germany's Finance Minister Wolfgang Schäuble said he could not confirm his counterpart's statement, calling it "speculation" at this stage. "As far as the Federal Finance Ministry and the German government are concerned there are no new developments," he said.

Steffen Kampeter, an official in Germany's Finance Ministry, insisted that any extension decision would be made after the inspectors' progress report was completed. "Anything prior to that is reading tea leaves," he told a German radio station. Jörg Asmussen, a board member at the European Central Bank, added that any extension "would mean the other eurozone states having to provide more financial means".

Earlier in the day, Mr Stournaras told MPs and reporters that after an all-night debate, Athens had "closed a deal on the package" of measures after the creditors backed down on labour reforms. An official at the Greek Finance Ministry confirmed the statement in an interview with The Independent, but no official announcement was made.

European officials specifically denied that any agreement had been reached. "I am not in a position to confirm anything in the report," said Simon O'Connor, a spokesman for the Economic and Monetary Affairs Commissioner, Olli Rehn. "There is no agreement yet."

Talks between political leaders that make up Greece's coalition government floundered on Tuesday after junior Democratic left party objected to labour reforms.

"We don't want to bring the government down, we just need to apply pressure to have a strong renegotiation with our lenders," Thodoros Margaritis, a senior official in the Democratic Left party, said.

After Mr Stournaras's speech in the Greek parliament, the opposition party leader slammed the coalition government's commitment to austerity after it had vowed to renegotiate the painful programme with the country's lenders as recently as April.