Eurozone Finance Ministers Won’t Release $2.15 billion Loan to Greece

Disagreements over new foreclosure rules continue, two European officials say

The Wall Street Journal

By GABRIELE STEINHAUSER and  VIKTORIA DENDRINOU

Updated Nov. 9, 2015 4:05 a.m. ET

BRUSSELS—Eurozone finance ministers won’t release €2 billion ($2.15 billion) of funding for Greece at their meeting here Monday amid continued disagreements over new foreclosure rules, two European officials said.

Senior officials from the currency union’s finance ministries were updated on Greece’s implementation of around 50 promised overhauls, known as milestones, during a conference call Sunday afternoon. While progress has been made on some issues—including measures to substitute a tax on private education, the governance of the country’s bailed-out banks and the treatment of overdue loans—Athens and its creditors will need more time to sign off on all overhauls, the officials said.

Greece needs the fresh loans to pay salaries and bills and settle domestic arrears. However, the government faces no immediate major payments to its international creditors, reducing the sense of urgency.

There will be “no agreement on [the] €2 billion,” one official said.

(Greek Payments due for 2015:

1.40 bn Euros Nov 13 2015 owed to T bill holders

306.9 millions Dec 7 2015 owed to IMF

2 bn Euros Dec 11 2015 owed to T bill holders)

Instead, officials say they now want Greece and its creditor institutions, which represent the other 18 eurozone governments and the International Monetary Fund, to reach a deal on the overhauls by Wednesday.

Senior officials from national finance ministries will reconvene Friday to assess the latest efforts, the two officials said.

Under the €86 billion rescue program agreed this summer, Greece was meant to implement overhauls by mid-October in return for funds that would allow the government to clear overdue payments to contractors and government agencies. But national elections in September and disagreements over some key measures have held up talks with creditors.

It “gets annoying,” one of the officials said of the delays.

The biggest outstanding issue are new rules for when banks can foreclose on homeowners who haven’t been paying their mortgages, the officials said. Greece’s left-wing Syriza government wants to protect citizens at risk of losing their primary residence and had initially wanted banks not to take possession of homes worth less than €300,000—an amount that creditors have deemed too high.

Since then Athens has lowered its protection threshold and drawn up strict criteria, such as a family’s annual income, that would limit the number of homes shielded from foreclosure, officials say.

French Finance Minister Michel Sapin said Monday he hoped finance ministers could overcome the differences on the foreclosure rules at their meeting. “France wants an agreement today and it’s perfectly possible,” he said, adding that the next round of loans should then be released later this week.

Mr. Sapin also said that limits on foreclosures also exist in other eurozone states. “People shouldn’t make demands on Greece for something that goes further than in their own country,” he said.

The pressure on Greece to secure the latest bailout tranche has eased since the summer, after stress tests on its banks showed lower-than-expected capital needs and its economy is forecast to shrink less than predicted this year. However, the delay on this set of overhauls is also putting off negotiations on how to cut the country’s massive debt load. The IMF has made agreement on debt reduction a precondition on formally joining the latest bailout.

—William Horobin in Paris contributed to this article.

Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com and Viktoria Dendrinou at viktoria.dendrinou@wsj.com