European leaders told finance ministers from the euro countries to conclude a debt financing agreement with Greece over the weekend, just days before Athens has to meet a crucial repayment deadline that carries the risk of bankruptcy and euro-exit.
An deal on a draconian austerity package is vital for creditors to unfreeze 7.2 billion euros (8.1 billion dollars) in bailout money that would get Prime Minister Alexis Tsipras off the hook for the time being.
"Leaders expect the eurogroup to conclude this process at their meeting on Saturday," EU President Donald Tusk said early Friday, after chairing a summit in Brussels.
Leaders of the 19 euro nations, he said, would not meet in Greece again until a deal is done.
Earlier on Thursday, a meeting of eurozone finance ministers broke up over disagreement on the Greek rescue package, intensifying doubts about whether Athens can pay the International Monetary Fund debts worth 1.6 billion euros ($1.8 billion) next Tuesday.
"European history is full of disagreements, negotiations and at the end, compromises," Tsipras said. "So, after the comprehensive Greek proposals, I am confident we will reach a compromise."
Greece\’s left-wing government and creditors have so far fallen short of a deal after leaders from the IMF, the European Central Bank and the European Commission raised the stakes by putting forward a joint set of demands from Greece. Athens saw the proposals as interference in policy rather than one over what would be fiscally feasible.
"They have a different orientation. They want to drop measures that increase taxes on profitable businesses. But it\’s a question of who will suffer more, and we don\’t want pensioners to suffer any longer," a Greek delegation member said, asking not to be identified because talks are ongoing.
Follow a dramatic week of talks between Tsipras and the leaders of creditor institutions, lead lender Germany expressed its doubts the loudest.
Athens had "not moved, rather moved backward," German Finance Minister Wolfgang Schaeuble said, arguing that the prospect of a deal "lies exclusively with those responsible in Greece."
In Washington, the IMF said Greece would not get any extra time to make the debt repayments due next Tuesday.
"We\’re expecting the payment to be made June 30," IMF spokesman Gerry Rice said.
A default on its debts could eventually force Greece out of the eurozone, which would be hugely painful for the country. Some experts say it could be manageable for Europe and the world economy, but that remains unclear and any failure would likely shake global markets.
"When Greece, Europe, the eurozone is at stake, we have to know how to finish negotiations," French President Francois Hollande said.
Tsipras is under massive pressure from Greeks themselves as the compromises suggested so far will mean more hardship for citizens already suffering the impact of past austerity measures aimed at bringing public spending into line.
Creditors are seeking a different mix of austerity measures than those proposed by Athens, making the cuts more immediate.
They include broad pension reductions, higher revenue from sales tax, and a faster elimination of tax exemptions — demands that are likely to fuel emerging dissent within the government if accepted.
Representatives from almost every Greek party were in Brussels, following developments blow by blow, to see whether they would be able to back any new deal in the Greek parliament, where a vote must pass by Monday.
Creditors have said they would consider debt relief for Greece, by improving repayment terms. But they are balking at discussing the issue now, preferring to first get Greece the loans it needs to avoid default next week.
Amid the uncertainty, Greece\’s bank deposit holders have been pulling out their savings — forcing the European Central Bank to increase emergency credit to the Greek banks on a daily basis since last week.
Experts say if Greece does not reach a deal, it could have to put limits on cash withdrawals soon.