German Chancellor Angela Merkel urged Greece and its creditors on Friday to keep pushing for a cash-for-reforms deal after Brussels negotiations hit stalemate, as European leaders heaped pressure on Athens to give ground.
Time is fast running out for Greece to reach agreement with its EU and IMF lenders and avert a default at the end of June that could see it tumbling out of the euro zone. But talks ended without a breakthrough on Thursday night and the International Monetary Fundteam abruptly left Brussels.
Both sides tried to keep hope alive on Friday and a Greek minister said he hoped for an agreement on June 18. European Commission President Jean-Claude Juncker said the ball was in the Greek government’s court, while the Eurogroup chief demanded “serious proposals” for reforms.
Greece needs a deal to unlock aid or loosen curbs on how much it can borrow in short term debt before a 1.6 billion euro ($1.8 billion) IMF repayment due by the end of this month.
“Where there’s a will there’s a way but the will has to come from all sides so it’s important that we keep speaking with each other,” Merkel told a conference in Berlin.
Despite the warnings of imminent default, Greek Prime Minister Alexis Tsipras is showing no signs of alarm. His first engagement after rushing home from Brussels on Thursday was an open air pop concert celebrating the revival of the ERT state TV station, closed exactly two years ago under cuts ordered by the country’s European Union and IMF lenders.
Renewed uncertainty put European markets on the backfoot and sent Greece’s top share index .ATG down on Friday morning. The German tabloid Bild reported that the German government was holding “concrete consultations”, including about how Athens might introduce capital controls restricting bank withdrawals in Greece and transfers abroad should the country go bust.
Economists believe a solution remains possible but acknowledge that the creditors may soon tell Athens to accept their demands or face “Grexit” – market shorthand for Greece becoming the first country to exit the euro zone.
“We are getting close to … this take-it-or leave-it scenario,” said Derek Halpenny from the Bank of Tokyo-Mitsubishi. “But nobody in my view is ready to trade the ‘Grexit’ view yet. The expectation is still that a deal will be reached.”