Greece says deal on debt crisis unlikely at Thursday talks

Greece has “political and moral duty” to reach agreement with creditors over its debt crisis, Finance Minister Yanis Varoufakis has said.

But he said Thursday’s meeting of eurozone finance ministers was unlikely to bring an immediate solution.

In return for more funding, creditors want further reforms from Greece.

But the ruling Syriza party is resisting those demands and, with talks deadlocked, fears are growing that Greece may default on its debts.

The European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) could extend fresh finance, but are insisting on reform and further austerity measures.

Varoufakis, when asked if there could be an agreement at the meeting of eurozone finance ministers in Luxembourg on Thursday, said: “I do not believe so.”

“Tomorrow we will set the scene for what we consider to be our political and moral duty, and that is to reach an agreement very, very quickly with our partners and the institutions,” he said.

On Wednesday Greece’s central bank warned that the country could be on a “painful course” to default and exit from both the eurozone and the EU.

Greece has seen regular protests against austerity measures

The Bank of Greece also warned that the country’s economic slowdown would accelerate without a deal.

“Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and, most likely, from the European Union,” it said in a report.

The bank added that about €30bn was withdrawn from Greek bank deposits between October and April.

Both Greece and its creditors appear to be waiting for the other side to make the next move – and all the while the risk of miscalculation, or of waiting too long, increases.

Tensions between the two sides became clear on Tuesday during a news conference held by European Commission President Jean-Claude Juncker.

Juncker, who had been seen as more sympathetic to the Greek government, said that Athens was responsible for the deadlock.

“I am blaming the Greeks for telling things to the Greek public which are not consistent with what I told the Greek prime minister,” he said.

Greece will not accept cuts to pension payments or public sector wages, saying two-thirds of pensioners are either below or near the poverty line.

International creditors want pension spending cut by 1% of GDP – it accounts for 16% of Greek GDP. They say their target is early retirement not individual pensions.

Creditors also want a wider VAT base but Greece says it will not allow extra VAT on medicines or electricity bills.

On Thursday attention will also be focused on a speech by German Chancellor Angela Merkel to the German parliament at 9am.

Merkel is under pressure from politicians in her own coalition to take a hard line with Greece.

On Wednesday Andreas Scheuer, the secretary-general of the CSU party, said the Greek government had not “realised the seriousness of the situation yet”.

In an interview with Rheinische Post newspaper he said: “They are behaving like clowns sitting in the back of the classroom, although they have received explicit warnings from all sides that they might fail to pass to the next grade.”

On Wednesday’s German Foreign Minister Frank-Walter Steinmeier said Greece did not want to present new proposals at Thursday’s meeting of finance ministers, which “means time is even more pressing”.