Despite an intensification of activity this week, Greece and its creditors failed to reach an agreement after crucial talks in Brussels late Wednesday, though both Athens and the European Union claimed to have made progress towards a solution and apparently hope to wrap up the deal by the middle of the month.
Greek Prime Minister Alexis Tsipras held talks over dinner with European Commission President Jean-Claude Juncker and Eurogroup Chairman Jeroen Dijsselbloem in Brussels in a bid to strike a deal that would pave the way for unlocking funds of about 7.2 billion euros from the existing bailout package.
"It was a good, constructive meeting. Progress was made in understanding each other's positions on the basis of various proposals," the European Commission said.
"It was agreed that they will meet again. Intense work will continue."
Media reports citing Greek officials said that both parties are trying to finalize a deal by June 14.
The cash-strapped country teeters on the verge of a default with a loan repayment to the International Monetary Fund due at the end of the week.
Greek officials have reportedly said that the country can pay the 300 million euros due on June 5th, but it faces more repayments to the IMF this month, totaling 1.6 billion euros. They had also hinted that the government may opt not to make Friday's payment if there is no sign of a deal by then.
Following the meeting, Tsipras said,"Don't worry about it," when asked about Friday's payment.
Athens and creditors had brought their own proposals to the meeting. The Greek proposal was the only "realistic and constructive" one on the table, Tsipras asserted.
He also described the talks as "constructive and friendly," adding that the lower surplus was a basis for discussion, the Greek state-backed ANA/MPA news agency reported.
That said, the anti-austerity Greek leader also acknowledged that there were "issues that no one could approach."
A late-night summit in Berlin on Monday led German Chancellor Angela Merkel, French President Francois Hollande, IMF Managing Director Christine Lagarde, European Central Bank President Mario Draghi and European Commission's Juncker to agree to intensify the talks to reach a deal with Greece, apparently before the end of this week.
The Berlin mini-summit was reportedly aimed to draft a proposal, dubbed a "final offer," to be presented to Greece. Attendance of the top leaders and officials at the meeting reflected the gravity of the situation.
Reports had cited European officials as saying that the creditors' offer was unlikely to be a 'take-it-or-leave-it' ultimatum.
The ANA/MPA on Thursday cited Greek government sources as saying that the five-page draft proposal for a staff-level agreement presented to Greece by creditors does not constitute a basis for discussion in its current form. However, they said it apparently leaves room for compromises in order to allow a deal in the immediate future and also the deadline for implementation of agreed measures could also be extended.
The creditors' proposal reportedly included measures such as higher VAT on energy, restaurants and medicine, social security spending cuts of 1 percent of GDP in 2015 and 2016 and abolition of the supplementary pensions of low-pension retirees by the end of 2015.
Reports also suggested that Greece was satisfied with the primary surplus targets set in the creditors' offer, which were 1.0 percent in 2015, 2.0 percent in 2016, 3.0 percent in 2017 and 3.5 percent in 2018.
The Greek government sources, meanwhile, described debt discussions as 'superficial' and said creditors' proposal on labor reforms were not very clear, the ANA/MPA reported. It remains unclear whether Greece presented any new pension proposals, a crucial point of contention in earlier talks.
Failing a deal with creditors, Greece's existing 240 billion euros bailout package would expire at the end of this month. Greece was the first euro area country to be bailed-out by the EU & IMF in 2010. A Greek default may invite the imposition of capital controls and pave the way for the exit of the country from the Eurozone.
The EU wants Greece to remain in euro as the impact of any adverse Greek event on the euro and the region's political landscape as well as financial markets would be severe and the fallout will not be limited to just Europe but could spread across the globe.
In Frankfurt, ECB Chief Draghi said the Governing Council wants Greece to remain in the Eurozone and seeks a strong agreement that "produces growth." The Greek economy is viable if right policies are implemented, he added.
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