Default by debt-wracked Greece and its exit from the euro now loom as a reality after the collapse of last-ditch talks between Athens and its creditors.
The crunch negotiations failed yesterday (local time), increasing fears the cash-starved Greek government was heading irreversibly into a financial abyss, with a huge IMF debt payment due at the end of the month.
"They came with their hands in their pockets," a furious EU source close to the negotiations said.
Greek officials said the failure was the fault of the International Monetary Fund, the country's most hardline creditor.
"The demands of the creditors are irrational, the discussions lasted 45 minutes," an irate Greek government source said.
All sides had agreed that the talks were the last chance for Athens to unlock vital bailout cash in return for tough reforms that Greek Prime Minister Alexis Tsipras still doggedly refuses.
Athens has labelled the IMF's position "intransigent and tough" because it is insisting on further pension cuts and a rise in value-added tax on basic goods, like electricity.
But in a rare statement on their position in the talks, the IMF has taken a conciliatory approach.
In an official blog, chief economist Olivier Blanchard said a deal would require "difficult decisions by all sides" - including Greece's European partners.
Nevertheless, Blanchard insists Greece must tackle its bloated pension system, which he said accounted for a whopping 16 percent of the country's economy.
According to an EU source, savings from the reform measures put on the table by anti-austerity Greece fell short by two billion euros.
The Greek proposal "remains incomplete", they said, and was not enough to unlock the 7.2 billion euros (NZ$11.56 billion) still remaining in Greece's international bailout, which expires on June 30.
Also at the end of the month, Greece faces a huge 1.6 billion euros (NZ$2.57 billion) payment to the IMF, with another 6.7 billion euros (NZ$10.76 billion) due to the European Central Bank in July and August.
"On this basis further discussions will now take place in the Eurogroup," the EU spokesperson said, referring to a meeting of eurozone finance ministers set for Thursday in Luxembourg.
To meet the June 30 deadlines, a reform deal would have to be resolved by the Thursday meeting of the eurozone's 19 finance ministers, who control the bailout purse strings.
But any deal also needs to go to many national parliaments, including in Germany, where passage is not certain.
Greece is shattered economically after six year of crisis, and despite two rescue programs worth 240 billion euros (NZ$385.49 billion).
The small Mediterranean nation is now buried under a mountain of debt equivalent to 180 percent of GDP, or almost twice the country's annual economic output.
AFP
source: newshub archive
