The latest update is that the Greek Government, on Wednesday February 18  Thursday February 19, will follow-up the ultimatum set by the EUROGROUP two days earlier with a “request for a loan extension”. The EUROGROUP clearly stated that they expected a “request for a program extension”.  Government officials in Greece have been making this LOAN/PROGRAM distinction very clear.

Let us step back one step:  As we presented last week, in 2010  Greece signed with the INSTITUTIONS (formerly knows as THE TROIKA – EC/ECB/IMF) the “Economic Adjustment Program for Greece”, a memorandum of understanding on financial assistance to the Hellenic Republic in order to cope with the Greek government-debt crisis.

It is this “financial assistance” that is termed now as a “loan” and for which the Greek Government is (allegedly) requesting an extension.

But by having a closer look at the actual “Economic Adjustment Program for Greece” we will read that:

The release of each disbursement to Greece must be approved by both the Eurogroup and the IMF’s Executive Board. Prior to this decision, the European Commission, the ECB and the IMF staff conduct joint review missions to Greece in order to monitor compliance with the terms and conditions of the Program.

In simplified terms, each loan installment is to be given to Greece when the Government has met a set of milestones clearly linked to specific paragraphs/terms of the MEMORANDUM OF UNDERSTANDING (a.k.a. MoU a.k.a. – God forbid – MNIMONIO) the governing document of the Program.

The following is an excerpt of an actual EC/ECB/IMF report of 11 August 2014.

Notice the close links of DISBURSEMENTS, MILESTONES and the MOU?

OUTCOME:  Although not yet official, there is no legal background to ask for the EC/ECB/IMF to extend the LOAN disbursements without linking them to the specific PROGRAM and the MoU sections.  Some sort of KOLOTOUMBA is to be expected by either side.