Weekend ultimatum to Tsipras to strike debt deal with creditors

After five months of negotiation between Greece and its creditors, Greek Prime Minister Tsipras has been given a weekend ultimatum by the world leaders to strike a debt deal with EU-IMF creditors or risk default.

Angela Merkel and Francois Hollande told the leftist Greek premier in brief talks on the sidelines of an EU summit that Saturday's meeting of eurozone finance ministers was critical.


"They reminded him that this meeting was crucial and decisive and that it was vital now to work towards a deal on a package that includes reforms, investment and financing," a source said.


But Tsipras, who has rejected creditors, demands for more austerity in return for unlocking bailout funds that would allow Athens to meet an IMF payment June 30, told them he could not understand their "harsh" stance.


"Alexis Tsipras informed the two leaders on the Greek proposal and stressed that the Greek side does not understand the persistence of institutions in such harsh measures," a Greek governmental source told AFP.

Meanwhile Jeroen Dijsselbloem, the head of the Eurogroup of finance ministers, said a deal had to be clinched on Saturday or there will not be enough time for it to get parliamentary approval.


"Tomorrow it really has to happen, for the simple reason that it has to go through parliament, first the Greek then of several member states," the Dutch finance minister told journalists in The Hague.

Asian markets sank again Friday on the new Greek fears.


Greece and its creditors have been locked for five months in bitter negotiations, unable to agree on a set of reforms Athens must implement in return for a final 7.2 billion euro ($8.1 billion) payout from its bailout.

It needs the money to pay the IMF 1.5 billion euros ($1.7 billion), and Germany's EU Commissioner Guenther Oettinger warned absence of a deal would mean an exit by Greece from the eurozone.

"'Grexit' is not an objective for us, but it is inevitable if we don't find a solution in the next five days," he told German radio Deutschlandfunk.

French Finance Minister Michel Sapin said: "Every day that passes brings us closer to the inevitable... a form of chaos, of disorder."


But Greece's outspoken finance minister Yanis Varoufakis said Greece remained firmly committed to remaining in the eurozone, all while sticking to its anti-austerity principles.

"I couldn't put it more strongly than to say that our commitment to remain in the eurozone is absolute," he told Irish radio RTE.

He slammed the "austerity package" demanded by the creditors that would "destroy our chances of growth."


"The Greek side has bent over backwards to accommodate some rather strange demands by the institutions. It is now up to them to come to the party," he added.

Another round of talks Thursday between the finance ministers of the 19-country currency union had been meant to produce a deal that EU leaders could rubber stamp at their Thursday-Friday summit next door.


But they broke down in acrimony, with Greece and its creditors producing rival plans amid differences on pensions, value added tax and spending cuts.

Marathon meetings between Tsipras -- whose anti-austerity Syriza party won elections in January -- and the heads of the European Commission, European Central Bank and International Monetary Fund, Greece's main creditors, also ended without a deal Thursday morning.

EU President Donald Tusk ruled out a summit of eurozone leaders like the one he called on Monday in a futile effort to resolve the crisis, saying officials "expect the Eurogroup to conclude this process at their meeting on Saturday."

The IMF meanwhile said that it believes Greece will make the payment. Failing that, it warned, Greece will immediately be declared in arrears, and its access to IMF aid cut.


But in counter-proposals handed to Greece on Wednesday, creditors called for further savings on pensions, higher VAT for restaurants and for defence expenditure to be slashed by 400 million euros instead of the proposed 200 million euros.

Any accord would need to be approved by Greek parliament, probably on Sunday, and risks splitting Tsipras's left-wing Syriza party.

(image credits: sbs.com.au)