International creditors sent Greek prime minister Alexis Tsipras home from a summit yesterday with a clear message – swiftly tone down your demands in the bailout talks over the next week or face financial ruin.
The International Monetary Fund (IMF) took the toughest stance, saying it was bringing its negotiators back to Washington as there had been no sign of compromise to bridge the sides’ differences.
“There has been no progress in narrowing these differences,” an IMF spokesman said yesterday. “There are major differences between us in most key areas.”
The creditors – the IMF and Greece’s fellow eurozone states – want the country to promise new economic reforms before they pay out another €7.2 billion (£5.2bn). Athens needs money to repay debts worth €1.6bn at the end of the month.
European Union president Donald Tusk earlier warned “there is no more time for gambling” and that next week’s meeting of the 19 eurozone finance ministers in Luxembourg should be the make-or-break session in sealing Athens’ fate.
Cutting through days of dense diplomatic talk about the state of negotiations, Mr Tusk said it was time for Mr Tsipras to stop biding for time with unworkable demands.
He added: “The Greek government has to be, I think, a little bit more realistic.”
The comments dented optimism created earlier in the day, when German chancellor Angela Merkel said Athens had committed to resolve the impasse in coming days.
Stock markets across Europe that had earlier rallied lost much of their gains. The Greek market closed up by a hefty 8.1 per cent before the IMF’s tough statement.
Despite the bluster, the financial and economic stakes are such that no one is thinking about cutting Greece loose from the eurozone or the global financial network. Failing a deal, there are fears that Greece could drop out of the euro, a move that would create huge uncertainty for Europe and global markets.
The IMF spokesman said: “We remain engaged. The IMF doesn’t leave the table.”
For months, Greece has wrangled with its creditors over the release of the bailout loans.
The eurozone’s finance ministers, commonly known as the eurogroup, meet in Luxembourg next Thursday and Friday, in a meeting that Mr Tusk says “should be decisive”.
EU Commission president Jean-Claude Juncker said a two-hour meeting with Mr Tsipras had been “important, interesting and friendly” but reported no breakthrough.
The creditors have made clear that Greece must improve its offer of reforms that are needed in return for the bailout loans.
The IMF’s spokesman noted that pensions and wages account for 80 per cent of Greece’s primary spending.
He said: “It’s not possible for Greece to achieve targets without reforms.”