Greece needs bailout extension to negotiate reforms, says Commission VP

By Jan Strupczewski & Paul Taylor

Greece can choose how to make its public finances healthy and its economy grow, but it must extend its bailout program by a few months to gain time to negotiate those steps, European Commission Vice President Valdis Dombrovskis said.

Greece's bailout from the eurozone runs out at the end of February. Unless it is formally extended, Athens will not receive a final aid tranche of 1.8 billion euros or be eligible to seek a further easing of eurozone loan conditions.

The new government of leftist Prime Minister Alexis Tsipras has so far said it has no intention of requesting an extension and wants to scrap the 240 billion euro bailout program and the intrusive international supervision that goes with it.

Without some kind of eurozone backing, Athens is unlikely to be able to finance itself on the market at sustainable rates.

Also Greek banks would no longer be able to use Greek government bonds as collateral to borrow money from the central bank and would be reliant on European Central Bank emergency liquidity assistance (ELA) to meet daily needs.

"In the European Commission's assessment the most realistic way forward is to... extend the duration of the program for another couple months or half a year, thus allowing also more time for negotiation," Dombrovskis told the Reuters Euro Zone Summit.

Asked how quickly Greece could run out of money, the commission in charge of the eurozone said he did not want to discuss "what ifs".

In an interview late on Wednesday, he there was scope to change some measures in the Greek program to achieve greater social justice, if Athens wanted, provided the alternative steps delivered a comparable fiscal effect.

"But for that we need scope...