After forcing Greece into more austerity measures, the next tranche of emergency loans to Greece (most of which will ultimately do a round trip back to Brussels) is now delayed because the path Greece is on is still not sustainable.

Greece still requires additional funding of around €32 billion. Germany has said no and the ECB has said no.

Please consider Greece to get more time but no immediate aid.

Euro zone governments will not agree to disburse more money to debt-ravaged Greece on Monday, despite the country approving a tough 2013 budget, because there is not yet a consensus on how to make its debts sustainable into the next decade.

Finance ministers gathered in Brussels should, however, give Athens two more years to make the budget deficit cuts demanded of it, a concession that will require funding of around 32 billion euros, according to a draft document prepared for the meeting.

The Greek parliament passed an austerity budget for 2013 late on Sunday and a structural reform package last Wednesday, meeting the conditions for the release of the next tranche of 31.5 billion euros of emergency loans from the euro zone.

But officials said the money would not be released since ministers are waiting for the European Commission, the IMF and the European Central Bank, together known as the troika, to present their ‘debt sustainability analysis’.

A compliance report by the troika calculated that if ministers agree to give Greece two more years to meet its targets, extra funding of around 15 billion euros would be needed up to 2014 and another 17.6 billion for 2015/16 — amounting to a 32.6 billion euros funding hole to be filled.

Discussion on how to close that gap will be top of the ministers’ agenda on Monday.

Officials hope granting Greece two more years to meet its goals will allow the economy to start growing again, otherwise it would never produce enough for the country to repay its debt.

A target was set in March for Greece to achieve a primary surplus of 4.5 percent of GDP in 2014 and while there is no final decision yet, officials say it is likely to be moved to 2016 because of delays with reforms and a deeper than expected recession.

The two extra years would also mean that the targeted Greek debt-to-GDP ratio, would be shifted to 2022, officials said.

Time is Money

One amusing thing about this ridiculous result is that time is clearly money. By giving Greece more time, Greece needs to come up with another €32.6 billion.

One way or another, creditors will have to take another haircut.

No amount of hoping, wishful thinking, or delays can change one simple fact: Virtually none of these loans will be paid back. The Troika may as well shift the date to the 12th of never as to 2022.

Mike “Mish” Shedlock