No Greece bailout deal as talks end
With major differences remaining between Greece and its creditors, eurozone finance ministers cut short a meeting on Greece's proposals to avoid a default and planned to meet again tomorrow.
Before the finance ministers' short meeting, Greek Prime Minister Alexis Tsipras had held long talks with key creditors but apparently failed to reach a compromise over what kind of reforms the country should make in return for much-needed loans.
Greece has promised mainly tax increases to achieve budget savings, whereas the International Monetary Fund would like more spending cuts. Mr Tsipras rejected the creditors' suggestions.
"The Greek side is unable to agree on such a course," a Greek government official said after Mr Tsipras assessed the proposals, which included fresh cuts in public sector payrolls and a timetable to scrap a pension safety net fund.
"These are very tough negotiations," the Greek official said. "But there is a common will to get somewhere."
Today's finance ministers' meeting was meant to iron out the details on the reforms in time for EU leaders to approve them at a summit they will hold tomorrow.
Greece has a 1.6 billion euro (£1.2 billion) debt to pay next Tuesday which it cannot afford unless the creditors unfreeze 7.2 billion euros (£5.1 billion) in bailout money.
The latest disagreement weighed on the Athens Stock Exchange, which dropped 1.8% after huge gains in the previous two days. Government bond yields in Greece, Spain and Portugal rose, an indication of investor concern.
Elected on an anti-bailout platform in January, Mr Tsipras's left-wing Syriza party had promised to scrap all austerity measures and demand forgiveness on a chunk of the country's bailout debt. The Prime Minister has had to backtrack partly on those pledges and could nw have trouble persuading politicians to back a new deal, which would have to be approved by Monday night.
Athens was forced into concessions by a punishing debt repayment schedule and an economy hammered by uncertainty: a return to mild recession, ratings downgrades and dramatic outflow of bank deposits that threatened to crash the country's financial system.
Greek Economy Minister Giorgos Stathakis said that so far all sides had made concessions.
He said Greece had convinced creditors to lower their demands for a primary surplus - the surplus when not counting interest payments on debt. As a result, that should help the Greek economy grow between 1% and 1.5% this year.
Meanwhile, Greece's banks remained under pressure as Greeks continued to withdraw money amid concerns over the country's financial future.
The European Central Bank had to increase again today the amount of emergency credit that Greek banks can draw. The move is meant to help the banks cope with the outflows of cash.
The ECB has increased its support to Greek banks every working day since Friday, a sign of how big a strain the uncertainty is having on the financial system.