Greece fails in bid for early cash release, reforms awaited

By Jan Strupczewski & George Georgiopoulos

Greece failed in a bid on Wednesday to secure a quick cash payment from the euro zone rescue fund to help stave off potential bankruptcy next month, raising pressure on Athens to deliver a convincing reform programme within days.

Athens had appealed for the European Financial Stability Facility to return 1.2 billion euros ($1.32 billion) it said it had overpaid when it transferred bonds intended for bank recapitalisation back to the Luxembourg-based fund this month.

But senior Euro zone officials agreed in a telephone conference on Wednesday that Greece was not legally entitled to the money, although they said they would consider how to deal with the issue in the future.

The decision by the Eurogroup Working Group was a setback for leftist Prime Minister Alexis Tsipras, who is struggling to secure fresh funds to keep his government afloat while he presents a comprehensive reform plan and argues for debt relief.

A source familiar with Greece's financial position told Reuters on Tuesday Athens would run out of money on April 20 without new cash.

EU paymaster Germany, to which Tsipras made a fence-mending visit this week after weeks of acrimony between Athens and Berlin, was among the countries that opposed handing back the 1.2 billion euros.

"We see no reason to release it,» German Finance Ministry spokesman Martin Jaeger told a routine news conference, adding that EFSF funding was made available to Greece last year as a safeguard during bank stress tests but had not been needed.

Jaeger said euro zone finance ministers decided last month, when they extended Greece's bailout agreement, to transfer that money back to the EFSF in Luxembourg where it would be available...