Eurozone leaders are weighing a plan to allow Greece to exit its four-year-old bailout at the end of the year by taking nearly €11bn in rescue funds that were not needed to shore up the country's banks and converting it into a line of credit that would backstop Athens when it raises cash from the markets on its own.
The plan, which will be discussed at a meeting of eurozone finance ministers in Brussels on Thursday, would allow Antonis Samaras, Greek prime minister, to declare an end to the quarterly reviews by the hated "troika" of bailout monitors ahead of parliamentary elections, which could come as early as March.
At the same time, backers of the plan believe it would give financial markets the security of knowing Athens could draw on the credit line in an emergency. It would also come with less onerous fiscal monitoring, which is a requirement for any "precautionary financial assistance" coming from the eurozone's €500bn rescue fund.
"Greece will probably go back to markets on the back of a [credit line] agreement, significantly undermining the troika's leverage to impose reforms," said Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy.
Mr Samaras's hopes of a "clean exit" from Greece's €172bn second bailout - which would mean no line of credit or additional outside monitoring - were dashed last month when Greek bonds sold off in a mini panic after he announced his intention to finish the bailout at the end of the year without any follow-on programme.
"A completely clean exit is highly unlikely," said a senior EU official involved in the discussions.
Greek officials are scrambling to finalise the remaining required economic reforms so they can agree the exit plan by December. Gikas Hardouvelis, the Greek finance minister, is expected to request an €11.4bn credit line at Thursday's meeting. Greece is looking to raise €6bn-€9bn on its own for next year, a senior Greek government official said.
The biggest remaining stumbling block remains the role of the International Monetary Fund in the plan. Unlike the EU, whose Greek bailout runs out of cash this year, the IMF programme is due to run into 2016.
The IMF has become a lightning rod for political anger in Greece - Poul Thomsen, the blunt Dane who heads the IMF's Greek team, has to travel in Athens with a significant security detail - and Greek political leaders are eager to eject the Fund from the programme.
"It's not helpful to have them camping in Athens," said one Greek official, referring to prolonged negotiations over the last bailout review which took nine months to complete.
But a group of eurozone countries led by Germany have insisted the IMF remain part of the programme, arguing the Fund's independence and credibility is essential to gaining support for a credit line in the Bundestag. The senior EU official suggested the remaining €16.4bn in the IMF's programme could be converted to a similar line of credit alongside the EU one.
"Very many governments in the euro area have said the IMF needs to be part of a future contractual arrangement," said the official.
Remaining resources in the Greek bank recapitalisation fund, known as the Hellenic Financial Stability Fund (HFSF), have long been seen as a possible source of financing for Athens if it were to avoid a third bailout.
But it was not clear sufficient funds would be left over in the HFSF until the European Central Bank completed its highly-anticipated eurozone bank stress tests, which were aimed at determining which financial institutions still required more capital.
The tests, unveiled just over a week ago, found three of Greece's largest banks still needed a combined €8.7bn in capital as of the end of 2013. But it also said those same banks had raised nearly €6.5bn on the capital markets since then, and only two - Eurobank, which remains €1.8bn short, and National Bank of Greece, just under €1bn - still need to raise additional cash.
If both are able to raise the extra money through private fundraising, the entire €11bn left in the HFSF could be used for the credit line.
Although technically the money would not be moved from one account to another - the HFSF funds are actually bonds issued by the eurozone bailout fund and not cash - a senior EU official said they would be treated as the same politically and should easily move through eurozone parliaments that would have to approve any new assistance to Greece.
"What is left over from the recapitalisation buffer, the equivalent of that, would be in a credit line," said the EU official. "In political terms, the money has already been made available to the Greek authorities."
Additional reporting by Kerin Hope in Athens
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