Greek parliament has approved the 2016 budget that includes sharp spending cuts and some tax increases amid economic recession.
The austere budget was passed with a majority of only eight votes – 153 to 145.
“This budget is a difficult task for a government that wants to leave its mark with social justice,” PM Alexis Tsipras told lawmakers.
Alexis Tsipras agreed to a batch of economic reforms in August to secure a euro zone bailout of up to €86 billion ($93 billion).
His leftist-led government has been under pressure to deliver tangible benefits to its poorest citizens since the agreement.
Greece’s budget makes €5.7 billion in public spending cuts including €1.8 billion from pensions and €500 million from defense. It also includes tax increases of just over €2 billion.
Despite the cuts, the budget will still have a greater deficit than the 2015 budget.
Earlier this year the country reluctantly agreed to the strict conditions of its third international bailout in five years.
After losing his majority in August as a result, Alexis Tsipras called an election and was returned to power in September with 35% of the vote.
Representatives of the euro zone, the European Central Bank and the International Monetary Fund (IMF) return to Greece on December 7 for more talks about pending reforms of the pension and tax systems and public administration.
The euro zone has also held out to Greece the possibility of long-term debt relief after a review of progress under the new bailout.
However, it has said that relief would come in the form of longer delays before repayments start or finish, not a reduction – or so-called “haircut” – in the amount that has to be repaid.
Greek unions are staging their first general strike against austerity since Alexis Tsipras’s left-wing Syriza government came to power in January.
As protesters gathered in Athens, public services were hit and some transport services ground to a halt.
The main unions appealed for members to walk out against the terms of Greece’s third eurozone bailout.
Greece’s government agreed to push through tax rises and spending cuts in return for €86 billion ($100 billion) in rescue loans.
Greek lawmakers have already voted to raise the retirement age and get rid of most early retirement benefits, and reduced rates of sales tax on some of the big Greek islands have been scrapped.
However, the main civil servants’ union ADEDY and the GSEE private sector union objected to proposals to scale back supplementary pensions and merge pension funds. They were joined by communist-affiliated union PAME.
Public transportation services were shut down, schools were closed and hospitals had only emergency staff levels. Buses and trolley buses were providing limited services.
Photo AFP/Getty Images
Museums and archaeological sites were also shut and news bulletins, newspapers and websites were disrupted because journalists had walked out.
Although general strikes became regular events in Greece in the years following its first eurozone bailout in 2010, this was the first called since Syriza came to power.
After reluctantly agreeing to Greece’s third international bailout in five years in August, Alexis Tsipras called an election and was returned to power in September with 35% of the vote.
Despite agreeing to a series of reforms, Greek officials are currently locked in a dispute with eurozone officials over bad home loans.
The government is trying to avoid indebted Greeks losing their homes, but creditors want an agreement on a mechanism for tackling non-performing home-loans before they unlock €10 billion to recapitalize Greek banks. A separate €2 billion bailout installment is also at stake.
There was some good news for the Greek economy on November 11 when officials announced that unemployment had fallen to 24.9% in August, the lowest level since June 2012.
Vassiliki Thanou, Greece’s top Supreme Court judge, has been appointed caretaker prime minister ahead of early elections next month.
Greece’s President Prokopis Pavlopoulos named Vassiliki Thanou after efforts to form a coalition failed.
Last week, Alex Tsipras resigned as prime minister to seek a new mandate for office.
Vassiliki Thanou, 65, becomes Greece’s first female prime minister.
Elections are expected to be scheduled for 20 or 27 September.
Vassiliki Thanou’s appointment ends a week of fruitless negotiations as opposition party leaders tried unsuccessfully to form a government.
Alexis Tsipras stepped down as prime minister and called early elections after 25 of his members of parliament quit Syriza over the bailout he agreed with European creditors and formed the left-wing Popular Unity party.
In a statement live on television on August 20, Alexis Tsipras said it was now up to the Greek people to give their verdict on whether to continue with his government’s program.
Alexis Tsipras is expected to win the next election although it is unclear whether he will secure a majority government.
However, he has ruled out a coalition with any of the more centrist opposition parties: centre-right New Democracy, the socialist Pasok party or the small centrist The River (To Potami) party.
Earlier this week an opinion poll for Greece’s Vergina TV suggested support for Alexis Tsipras’s Syriza party had declined to 24%, down from 34% in July.
New Democracy was in second with 22%, while the far-right Golden Dawn ranked third with 6%.
Popular Unity, which split from Syriza, was put on 4.5%.
Panagiotis Lafazanis, who formed Popular Unity, was the last of three party leaders who were given the chance form a government in the past week.
He used the opportunity to air his anti-bailout message before handing back the mandate to the president on Thursday.
Former Finance Minister Yanis Varoufakis decided not to join Popular Unity despite his opposition to the €86 billion ($96 billion) eurozone bailout agreed by his successor Euclid Tsakalotos.
Greek PM Alexis Tsipras has announced he is stepping down and has called an early election.
Alexis Tsipras had faced a rebellion within his ruling hard-left Syriza party over a new bailout deal which has been agreed with international creditors.
Greece received the first €13 billion ($14.5 billion) tranche on August 20, allowing it to repay a debt to the European Central Bank (ECB) and avoid a messy default.
However, the austerity measures needed for the deal angered many in his party.
Alexis Tsipras had to agree to further painful state sector cuts, including far-reaching pension reforms, in exchange for the bailout – and keeping Greece in the eurozone.
The overall bailout package is worth about €86 billion over three years. The payment of the first tranche was made on August 20 after the bailout deal – Greece’s third in five years – was approved by relevant European parliaments.
Photo AP
Alexis Tsipras made the announcement in a televised state address on August 20.
The prime minister said that with the first tranche of the bailout arriving, he now had the moral duty to ask the Greek people to deliver their judgment.
He said he would seek the vote of the Greek people to continue his government’s program.
Alexis Tsipras said Greeks would have to decide whether he had represented them courageously with the creditors.
He will visit President Prokopis Pavlopoulos later in the evening to submit his resignation. Greece will then be run by a caretaker government.
Reacting to the news, Martin Selmayr, European Commission President Jean-Claude Juncker’s chief-of-staff, tweeted that “swift elections in Greece can be a way to broaden support” for the bailout deal.
Some 43 of Syriza’s 149 members of parliament had either opposed the bailout or abstained in the August 14 parliamentary vote that approved the deal.
The rebellion meant Alexis Tsipras, who was elected this January, had effectively lost his parliamentary majority.
Alexis Tsipras had won power on a manifesto of opposing the stringent austerity conditions that he has now accepted.
He said he was forced to do so because a majority of Greeks wanted to stay in the eurozone, and this could not be achieved in any other way.
Greece remains under strict capital controls, with weekly limits on cash withdrawals for Greek citizens.
According to the Greek constitution, if a government resigns within a year of election, the president will ask the second-largest party – in this case the conservative New Democracy – to try to form an administration.
If this fails, the next largest party must be given a chance.
However, analysts say both parties can waive this and allow the president to approve the snap election.
The Athens Stock Exchange index, the Athex, has fallen by 22.87% as trading resumes after a five-week closure.
Greece’s top four lenders – Piraeus Bank, National Bank, Alpha Bank, and Eurobank – were biggest fallers, all down by 30%, the maximum allowed. Banks make up about a fifth of the index.
The bourse was shut just before the Greek government imposed capital controls at the height of the debt crisis.
Traders had predicted sharp losses as a result of pent-up trading.
The Athex recovered slightly in morning trading, but was still down more than 18% in midday trading.
In accordance with conditions laid down by the government and the European Central Bank (ECB), local investors are not allowed to buy shares with money from their bank accounts, only with cash kept in safe deposit boxes or at home.
Meanwhile, data released on August 3 showed that Greek manufacturing activity plunged in July to its lowest level on record as a three-week bank shutdown caused new orders to dive and created serious supply problems.
Markit’s purchasing managers’ index (PMI) for manufacturing, which accounts for about a tenth of the economy, fell to 30.2 points, the lowest reading since records began in 1999. A measure of 50 denotes growth.
Not long after the market reopened, the Athex had plunged to 615.16 points, down by 182.36 points from the June 26 close.
By comparison with other global markets, the biggest one-day fall in the value of the US Dow Jones was 22.61%, seen on October 19, 1987, known as “Black Monday”.
Constantine Botopoulos, head of the Greek capital markets commission, told Skai radio: “Naturally, pressure is expected, markets will not fail to comment on such an extensive shutdown.”
He added: “But we must not get carried away. We must wait until the end of the week to see how the reopening will begin to be dealt with more coolly.”
Although Greece struck a bailout deal with its creditors last month, political in-fighting in Athens over the conditions could still result in PM Alexis Tsipras calling an early election.
The Greek economy has begun to reverse the gains it was making before Alexis Tsipras’s Syriza-led coalition took power in January on an anti-austerity platform.
The European Commission expects Greece to go back into recession this year, with the economy contracting by between 2% and 4%.
The Greek economy was in recession for six years until 2014.
Greece will receive a €7 billion bridging loan from an EU-wide fund to keep its finances afloat until a bailout is approved, eurozone ministers have agreed.
The loan is expected to be confirmed on July 17 by all EU member states.
In another development, the European Central Bank (ECB) agreed to increase emergency funding to Greece for the first time since it was frozen in June.
The decisions were made after Greek lawmakers passed tough reforms as part of a eurozone bailout deal.
The bridging loan means Greece will be able to repay debts to the ECB and IMF on July 20.
Greek banks, which have been closed for nearly three weeks, could also reopen on July 20, Greek media reported, although credit controls will remain in place.
Eurozone leaders agreed on the bailout in principle in Brussels on July 13, on the condition that the Greek parliament passed reforms on taxation increases and pension curbs by July 15.
The €7 billion bridge loan was agreed in a conference call on July 16 to tap the EU’s EFSM emergency fund.
At a news conference on July 16, ECB President Mario Draghi said emergency funding – ELA – to Greek banks was being raised by €900 million over one week.
“Things have changed now,” he said.
“We had a series of news with the approval of the bridge financing package, with the votes, various votes in various parliaments, which have now restored the conditions for a raise in ELA.”
Greek PM Alexis Tsipras won the parliamentary vote in the early hours of Thursday by 229 votes to 64, but needed the support of opposition lawmakers to do so.
His left-wing Syriza-led government is expected to survive, despite losing its majority after 38 Syriza lawmakers rejected the reforms.
It paves the way for eurozone finance ministers to open detailed talks on the bailout, worth up to €86 billion, and on July 16 they said they agreed “in principle” to start negotiations.
Finland’s parliament on July 16 approved the bailout talks – one of a number of eurozone states which require a mandate from their own parliament for Greece to secure new funds.
Germany’s parliament is due to vote on the deal on July 17.
Greece’s biggest banks stocks have plunged on the Athens Stock Exchange, following a fresh blow to the country’s debt negotiations.
Stocks in the National Bank of Greece fell almost 6%, while Piraeus and Alpha banks fell more than 5%.
IMF officials pulled out of talks with Greek politicians in Brussels on June 11, citing “major differences”.
Greece is seeking to avoid defaulting on a €1.5 billion debt repayment to the IMF.
The payment is due by the end of the month.
Shares on the Athens Stock Exchange had soared on June 11 amid renewed optimism about Greece’s talks with its creditors.
The index climbed more than 14% – the best performance in several weeks.
But the IMF’s withdrawal has dampened investors’ moods.
On June 12, Jeroen Dijsselbloem, president of the Eurogroup of finance ministers, said a deal without the IMF was “unimaginable”.
However, German Chancellor Angela Merkel urged all parties to continue negotiations.
Speaking at a business conference in Berlin, Angela Merkel said: “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”.
Greece’s state television ERT is back on air after two years.
The Greek broadcaster was closed down in 2013 under austerity measures.
The left-wing Syriza party made the reinstatement of ERT a key pledge in January’s election, which it won.
Syriza said all of the more than 2,600 employees made redundant in 2013 have been offered jobs by the station.
Presenter Nikos Aggelidis said at the start of the first show on June 11: “It’s a special day for all Greeks, for those who love Greece and for those who love freedom of information.”
“We’re nervous. We’re very touched.”
Photo Reuters
His co-host Vasiliki Haina said: “It’s a special day for us, a difficult day.”
ERT’s television channel went off air in the middle of a program in 2013, and viewers saw only a black screen. There had been no warning of the channel coming to an end.
The decision to end ERT, which cost €300 million ($337 million) to run, led to protests on Greek streets.
Some said the network was plagued by cronyism and had appeared immune from cuts and reform.
While ERT continued to broadcast on the internet, a smaller-scale replacement, Nerit, was introduced in May 2014.
Nerit enjoyed moderate success despite a smaller staff, and secured Champions League football coverage and rights to broadcast the Eurovision song contest.
Nerit’s television operation merged with ERT on June 11.
The letters N and I were removed from the sign on Nerit’s building to spell ERT earlier this week.
ERT will be funded by a €3 surcharge added to electricity bills – less than the surcharge before it went off air.
Greece’s government, which is fighting to secure loans to help stabilize the country’s finances, called the reinstatement of ERT “a victory for democracy”.
Greece is expected to reach an agreement with its international creditors within the next week, Finance Minister Yanis Varoufakis has said.
The Greek government is fast running out of money and is due to make a payment of €1.5 billion ($1.7 billion) to the International Monetary Fund (IMF) on June 5.
Yanis Varoufakis told Star TV a deal with creditors was “very close” and denied Greece might leave the eurozone.
“Another currency is not on our radar,” he said.
PM Alexis Tsipras also talked up the prospect of a deal in a speech to Greek business figures earlier, saying the government was “in the final straight” before a deal.
Greece has been locked in negotiations with the EU and IMF over economic reforms they say must be implemented before the final €7.2 billion tranche of the country’s €240 billion bailout is released.
Issues over pension reform, taxation, deregulation of the labor market, and the re-hiring of 4,000 former civil servants are yet to be resolved.
Last week, the government emptied its IMF reserves in order to pay €750 million in debt interest on its existing loans.
An apparent proposal from European Commission President Jean-Claude Juncker emerged in Greek newspaper To Vima on May 18 before a spokeswoman quickly said she was unaware of it.
However, the plan for emergency funding and smaller primary surplus targets, in return for limited Greek fiscal reforms worth €5 billion, was not completely denied.
A Commission spokeswoman said she was unaware of Jean-Claude Juncker’s reported proposal.
The status of Jean-Claude Juncker’s proposal was unclear, but European Economic Affairs Commissioner Pierre Moscovici complained in Berlin that the left-led government was “more eager to say what they don’t want to keep in the program than to propose alternatives”.
Greek media reported on May 19 that the government had sent proposals to its international creditors to revamp VAT rates in an attempt to tackle tax evasion.
Alexis Tsipras is due to attend the EU Eastern Partnership Summit in Riga, where Greece is likely to be a key topic.
Yanis Varoufakis said a payment deal was on the cards, but insisted he would reject any compromise he considered “non-viable”.
European Commission spokesman Margaritis Schinas has welcomed the commitment by the Greek government to bring the talks to a conclusion, but said more time and effort was needed “to bridge the gaps on the remaining open issues in the negotiations”.
The Greek government has started the transfer of €750 million ($834 million) in debt interest to the International Monetary Fund (IMF).
The move was carried out as eurozone finance ministers met in Brussels in a bid to unlock the final €7.2 billion tranche of Greece’s €240 billion EU/IMF bailout.
The eurozone finance ministers said Greece had made “progress” but more work was needed.
Greek Finance Minister Yanis Varoufakis said his country faced a cash crisis within a “couple of weeks”.
“The liquidity issue is a terribly urgent issue. It’s common knowledge, let’s not beat around the bush,” he told reporters after the talks.
The Greek government has until the end of June to reach a reform deal with its international creditors.
Its finances are running so low that it has had to ask public bodies for help.
Eurozone governments have insisted that Greece agree to economic reforms in return for further bailout funding, and there had been fears that the country could default on its latest IMF debt repayment.
However, a Greek finance ministry official was quoted as saying that the order for repayment had been executed on May 11. Almost €1 billion has been handed over to the IMF in interest payments since the start of May.
It is unclear how the Syriza-led government came up with the funds, but the mayor of Greece’s second city Thessaloniki revealed last week that he had handed over cash reserves in response to an appeal for money.
No breakthrough was expected in Brussels on Monday, but Greece was seeking a confirmation that it had made sufficient progress in negotiations.
It was hoping that part of the EU/IMF bailout money could be paid out and that the European Central Bank would restore liquidity to the country’s beleaguered banks.
In a statement, the eurozone finance ministers said they “welcomed the progress that has been achieved so far” in the negotiations, but added: “We acknowledged that more time and effort are needed to bridge the gaps on the remaining open issues.”
Eurogroup chairman Jeroen Dijsselbloem said there had to be a full deal on the bailout before Greece received any further payments.
A defiant Greece has decided to rehire thousands of public sector workers, including cleaning ladies, despite sustained pressure from its international creditors.
Greek lawmakers passed a law to give back jobs to some 4,000 workers who were laid off under severe austerity cuts.
The move comes as Athens seeks a deal on more financial aid ahead of a meeting of eurozone finance ministers on May 11.
Greece is running out of money as it has to pay €750 million ($845 million) to the International Monetary Fund (IMF) on May 12.
International creditors have demanded cuts in spending, including plans to trim the civil service and privatization of state assets, in order for Greece to continue receiving loans.
On May 7, the Greek parliament adopted a bill to rehire school guards, cleaning ladies and civil servants who lost their jobs or were earmarked for dismissal under the austerity program.
In 2014, 32 cleaning ladies sacked by the Greek finance ministry came to the European Parliament in Strasbourg in France to plead their case.
The insistence of the cleaners – who were replaced by cheaper workers – made them famous all over Greece.
Yesterday’s bill in the Greek parliament does not violate the terms of a massive bailout by the EU and IMF, which allows Athens to hire one public employee for every five who leave.
However, the move – combined with the reopening of the public broadcaster ERT – is likely to face criticism from the eurozone negotiators.
The talks with the IMF and EU are expected to continue over the weekend.
EU officials say a deal is unlikely before Greece has to make the IMF payment on May 12.
Eurozone officials say no further loans will be released until further economic reforms have been agreed.
Greece needs progress at May 11 meeting because that is likely to affect the willingness of the European Central Bank to allow the continued emergency lending that is keeping Greek commercial banks afloat.
Greek Finance Minister Yanis Varoufakis insisted the country would meet May 12 deadline.
Yanis Varoufakis also rejected the view that Greece had been reckless with bailout money, saying that 91% of the bailout funds his country had received so far had been spent on repaying banks, particularly northern European banks such as Germany’s – rather than helping Greece’s economy.
Yanis Varoufakis again stressed that Greece had no intention of leaving the euro.
Greece met its deadline on May 6 for a repayment for €200 million.
Greece’s PM Alexis Tsipras has said his country is in the final, critical stretch of talks with its international creditors and that he believes an interim deal will be in place by May 9.
Greece’s objective was to find an agreement this week or next week at the latest, Alexis Tsipras said in a marathon TV interview on April 27.
Alexis Tsipras defended Finance Minister Yanis Varoufakis, who was sidelined from Greece’s negotiating team on April 27.
However, the prime minister admitted mistakes had been made in talks with EU partners.
Since Greece’s left-wing Syriza party came to power on January 25, it has sought to renegotiate the terms of the country’s €240 billion ($260 billion) bailout from the IMF and EU.
Greece’s negotiators have so far failed to satisfy the country’s international creditors with the scope of economic reforms required before the EU hands over the latest €7.2 billion tranche of the bailout, which the government needs to pay its bills.
Yanis Varoufakis was left isolated at an EU finance ministers meeting in Latvia on April 24, skipping a state dinner and tweeting a line from late US President Franklin Roosevelt.
Describing Yanis Varoufakis as an important asset for Greece, Alexis Tsipras argued that he had annoyed his European colleagues because he spoke their language better than they did.
From now on, Greece’s negotiations will be led by another economist in the government, Euclid Tsakalotos.
In his three-hour appearance on Greece’s Star TV, Alexis Tsipras acknowledged there was a “negative atmosphere” surrounding the talks but he suggested it was all a standard part of negotiations.
Alexis Tsipras was also critical of the government’s European negotiating partners, accusing them of reneging on a verbal commitment in February to allow Greek banks to finance the government.
“I believe we are close. I believe that if no-one wants to undermine or torpedo [the talks] we are close to an accepted package,” he said.
There would be concessions, the prime minister said, such as the part privatization of Piraeus port and the leasing of 14 regional airports.
Greece is facing a €200 million debt interest payment to the IMF on May 1st and has appealed to various public bodies to provide money from their cash reserves.
The big debt interest payment to the IMF is due on May 12, when the Greek government will have to find another €750 million.
Almost half the international investors surveyed by German research group Sentix believe Greece will leave the euro in the next 12 months.
Sentix’s break-up index for Greece rose from 35.5% in March to 48.8% in April, based on a survey of around 1,000 investors.
Alexis Tsipras rejected the idea of snap elections if EU talks failed but he did say that a referendum could be held on a final deal.
According to German finance minister Wolfgang Schauble, Greece would struggle to find creditors outside the EU and IMF.
Wolfgang Schauble said Greece would be welcome to try to find investment from Beijing or Moscow, but may have difficulties.
His warning came after fears of a Greek debt default saw its borrowing costs jump 3.5 percentage points to 27%.
Greek Finance Minister Yanis Varoufakis said his government refuses to consider leaving the EU: “Toying with Grexit… is profoundly anti-European.”
Yanis Varoufakis also promised to “compromise, compromise, compromise without being compromised” to satisfy current creditors.
Wolfgang Schauble and Yanis Varoufakis were speaking at talks in Washington.
On April 15, ratings agency S&P downgraded Greece’s credit rating.
Yields also rose on longer-term Greek borrowing, with the 10-year bond yield – the amount investors demand for lending – rising one percentage point to 13%.
Wolfgang Schauble said that the Greek government needs to find creditors.
“The Europeans have said, OK, we are ready to do it [lend money] until 2020… If you find someone else, whether it’s in Beijing, in Moscow, in Washington DC, or in New York who will lend you money, ok, fine, we would be happy. But it’s difficult to find someone who is lending you in this situation amounts [of] €200 billion.”
He added that Greece must focus on increasing its competitiveness and primary surplus.
Wolfgang Schaeuble was speaking after the Greek government’s borrowing costs surged on April 16.
According to the Financial Times, Greece had made an “informal approach” to the International Monetary Fund to have its bailout repayments delayed, but had been rebuffed.
However, IMF chief Christine Lagarde said at the World Bank spring meeting in Washington: “We have never had an advanced economy asking for payment delays.
“Payment delays are analysed as additional financing granted to that country. Additional financing means additional contribution by the international community – some of which are in much direr situations than the country eventually seeking those delays.
“Payment delays had not been granted by the board of the IMF in the last 30 years and it was eventually granted to a couple of developing countries and that delay was not followed by very productive results.
“It’s clearly not a course of action that would actually fit or be recommendable in the current situation.”
Greece owes the IMF some €1 billion ($1.06 billin) in repayments next month.
Many in the markets think the Greek government will struggle to make those payments if it does not agree an economic reform package with European creditors soon.
Failure to agree a plan with creditors will mean that the country will default, a development that could force the government to put limits on money transfers and even lead Greece to leave the euro.
EU spokesman Margaritis Schinas said on April 16 that the EU was “not satisfied with the level of progress made so far” in debt negotiations.
Wolfgang Schauble had warned that he did not expect an agreement between Athens and its creditors in the next week.
However, Greek PM Alexis Tsipras on April 16 said he was “firmly optimistic” the Greek government could reach a deal with its creditors.
“Despite the cacophony and erratic leaks and statements in recent days from the other side, I remain firmly optimistic that there will be an agreement by the end of the month,” Alexis Tsipras said.
According to Alexis Tsipras, several points of agreement had been found since talks first started, including on areas such as tax collection, corruption and initiatives to distribute the tax burden on those who have the ability to pay.
HEe said the two sides still disagreed on four areas: labor issues, pension reform, an increase in value-added taxes and privatizations, which he referred to as “development of state property”.
In a later tweet, Alexis Tsipras said he was “certain that Europe will choose the path to democracy”.
The Greek government has dismissed media reports that the country is preparing to default on its loans if it cannot reach agreement on its bailout terms with international creditors.
A government spokesman said negotiations were proceeding swiftly towards a solution.
Greece negotiated a three-month extension to its €240 billion ($272 billion) bailout at the end of February.
The Greek government is due to pay the IMF €203 million on May 1st and €770 million on May 12th.
Photo Reuters
However, reports suggest the government is rapidly running out of money. It needs to find €2.4bn to pay civil service salaries and pensions this month.
The Greek government has also denied reports that it was considering calling early elections if it failed to negotiate a settlement with its international creditors.
Last week, eurozone officials said Greece only had six working days left to come up with a revised list of reforms to seal a deal on its next rescue bailout.
Eurozone deputy finance ministers want an agreement on the €7.2 billion loan in time for a Eurogroup meeting on April 24th.
PM Alexis Tsipras has said that Athens will not be able to service its debt without financial help from the European Union.
Greece’s PM Alexis Tsipras has arrived in Moscow for talks with President Vladimir Putin, as his country struggles with a debt crisis.
Alexis Tsipras will also meet Russian PM Dmitry Medvedev on April 9.
Greece is embroiled in negotiations with the EU and IMF to unblock a bailout package and could run out of funds within weeks.
Greek officials have previously pointed to Russia as a possible alternative source of financial assistance.
Analysts say Russia’s own economic woes mean any help would be limited.
“Russia is not and cannot be a (EU) substitute for Greece, it can only be a supplementary option,” said Constantinos Filis from the Institute of International Relations.
Alexis Tsipras and Vladimir Putin are expected to discuss ties between the EU and Russia, which were badly strained by the Ukraine crisis.
Before his arrival, Alexis Tsipras described the sanctions imposed by the EU and US on Russia in the wake of its annexation of the Crimea as “a road to nowhere”.
The European Parliament President, Martin Schulz, said Alexis Tsipras should not break with the EU line on sanctions.
“Greece demands and gets a lot of solidarity from the EU. We can therefore also ask for solidarity from Greece and for this solidarity not to be ended unilaterally by pulling out of joint measures,” he told a regional German newspaper, the Muenchner Merkur.
Russia imposed a ban on many western food imports in retaliation, but Agriculture Minister Nikolai Fyodorov has said the government could consider removing three countries, including Greece, from the embargo, Russian state media reported.
Alexis Tsipras came to power pledging to end austerity, but his plans have met resistance from Greece’s EU/IMF creditors, who lent the country billions to help it avoid bankruptcy.
Greece has not received bailout funds since August 2014, with the EU and IMF dissatisfied with the pace of Greek reforms.
A Greek repayment of €448 million ($483 million) to the IMF is due on April 9.
On April 7, the Greek government said Germany owed Greece nearly €279 billion ($303 billion) in war reparations for the Nazi occupation during World War Two.
The Greek stock market fell by more than 4% at its open on Tuesday, February 17, after European finance ministers failed to reach a new deal to restructure the country’s debts.
Greek bank shares fell almost 9%, while the government’s borrowing costs rose, with the yield on a 10-year sovereign bond rising 82 basis points to 10.74%.
On Monday night, Greece rejected a plan to extend its €240 billion bailout.
Greek Finance Minister Yanis Varoufakis called the EU deal “absurd” and “unacceptable”.
However, Yanis Varoufakis declared he was ready to do “whatever it takes” to reach agreement over Greece’s bailout, despite the collapse of the talks.
He also said he was prepared to agree a deal under different conditions.
The Greek stock exchange recovered some ground as the day progressed, but at midday on Tuesday in Athens, it was still 2.25% lower.
Stock exchanges across Europe all fell in morning trade before recovering.
Germany’s main index, the Dax, was 0.35% lower and France’s blue chip index, the CAC-40, down 0.19% at mid-day.
In the UK, which has less exposure to Greece’s debt woes, the FTSE 100 Index which also started the day lower, had risen 0.45% by lunchtime.
JP Morgan claimed over the weekend that €2 billion worth of deposits was flowing out of Greek banks each week and estimated that if that were to remain the case, they would run out of cash to use as collateral against new loans within 14 weeks.
The investment bank’s estimate is based on a calculation that a maximum of €108 billion of deposits is left in Greek banks.
The most up-to-date figures from the Greek central bank show deposits dropped 2.4% month-on-month in December to €160.3 billion from €164.3 billion, marking the third monthly fall in a row.
Dutch Finance Minister Jeroen Dijsselbloem, who is also chairing the Eurogroup meetings of eurozone finance ministers, warned on Monday night there were just days left for talks.
Jeroen Dijsselbloem said it was now “up to Greece” to decide if it wanted more funding or not.
Ahead of Tuesday’s meeting, he said: “I hope they [Greece] will ask for an extension to the program, and once they do that, we can allow flexibility, they can put in their political priorities.
“Of course, we will see whether their program remains on track. But that is the way forward. It’s really up to the Greeks. We cannot make them or ask them. It really it really is up to them. We stand ready to work with them, also [over] the next couple of days.”
Greece’s current bailout expires on February 28. Any new agreement would need to be approved by national governments, so time is running out to reach a compromise.
Without a deal, Greece is likely to run out of money.
On Tuesday morning, Luxembourg’s Finance Minister, Pierre Gramegna, called for a greater degree of compromise on both sides.
“We can’t remain in a blockade, so everyone has to move a bit, water down demands, so we can find a compromise. There are flexibilities in the program, we have to make use of them,” he said.
“When the Greeks are against the programme and don’t want to work in this framework, it will be tough.”
Yanis Varoufakis said on Tuesday ministers would “continue to deliberate”, in order to enhance the chances of a deal.
He added he wanted to achieve “a very good outcome for the average European. Not for the average Greek, the average Dutch person or the average German”.
“We know in Europe how to deliberate in such a way as to create an honourable solution out of an initial disagreement,” Yanis Varoufakis said.
Greece has proposed a new bailout program that involves a bridging loan to keep the country going for six months and help it repay €7 billion of maturing bonds.
The second part of the plan would see Greece’s debt refinanced. Part of this might be through “GDP bonds” – bonds carrying an interest rate linked to economic growth.
Greece also wants to see a reduction in the primary surplus target – the surplus the government must generate (excluding interest payments on debt) – from 3% to 1.49% of GDP.
Two opinion polls last week indicated that 79% of Greeks supported the government’s policies, and 74% believed its negotiating strategy would succeed.
Greece’s PM Alexis Tsipras says he believes it will be possible to find a solution to the stand-off with the EU over his country’s debt.
Alexis Tsipras said he was “optimistic” after meeting the heads of the European Commission, European Council and European Parliament in Brussels.
The new prime minister and his finance minister are on a diplomatic offensive to reassure eurozone leaders about their plans.
Alexis Tsipras has pledged to renegotiate the terms of a €240 billion bailout.
His far-left party Syriza was elected last month on a promise to end austerity measures.
“We respect the rules of the European Union,” Alexis Tsipras said after his meetings on February 4.
“I’m very optimistic… Of course we don’t have already an agreement but we are in a good direction to find a viable agreement.”
Speaking at the joint news conference, European Parliament President Martin Schulz described their talks as “fruitful” but said there were difficult times ahead.
Meanwhile, Greek Finance Minister Yanis Varoufakis said his talks with ECB chief Mario Draghi in Frankfurt had also been encouraging.
“We had a very fruitful discussion and exchange,” Yanis Varoufakis told reporters.
He is keen to convince the ECB that Greece’s debt payments could be linked to the performance of the economy – the more it grows the more interest Greece would pay – through the use of debt swaps.
However, a report in the Financial Times quoted officials involved in the negotiations as saying that the ECB would oppose a crucial part of his plan – the sale of short-term treasury bills to raise €10 billion.
Today’s talks were the latest in a series of European trips to reassure leaders about the plans of a government elected on January 25 on a promise of writing off most of Greece’s spiraling debt.
Alexis Tsipras’s Syriza party had also sparked alarm on the markets and among eurozone officials when it said it would refuse a new tranche of bailout funding, prompting questions about how it would finance itself.
Greece’s current program of loans ends on February 28. A final €7.2 billion is still to be negotiated, but the new government has already begun to roll back austerity measures.
Yanis Varoufakis is hoping to obtain quick cash for Greece while a new plan is agreed amongst the various eurozone members.
Eurozone finance ministers are due to meet on February 11 to discuss Greece’s debt proposals.
Earlier, Alexis Tsipras met European Commission President Jean-Claude Juncker and European Council President Donald Tusk.
Jean-Claude Juncker was expected to press Alexis Tsipras for a “technical” extension of Greece’s current deal. The Greek leader is to travel to Paris to meet President Francois Hollande later.
On February 5, Yanis Varoufakis is expected to meet Wolfgang Schaeuble, the German finance minister.
Wolfgang Schaeuble has emerged as the one of the toughest critics of the new Greek government, previously saying: “Elections change nothing. There are rules.”
German Chancellor Angela Merkel has ruled out Greece’s debt cancellation, saying creditors had already made concessions.
Greece still has a debt of €315 bilion – about 175% of GDP – despite some creditors writing down debts in a renegotiation in 2012.
Greece’s new PM Alexis Tsipras has said he is confident that agreement can be reached with creditors over repayment of his country’s debts.
Alexis Tsipras said in a statement issued to Bloomberg news agency that he had never intended to act unilaterally.
This week, German Chancellor Angela Merkel has ruled out debt cancellation, saying creditors had already made concessions.
Alexis Tsipras’ Syriza party won last weekend’s election with a pledge to have half the debt written off.
Its new Finance Minister Yanis Varoufakis has refused to work with the “troika” of global institutions overseeing Greek debt, which had agreed a €240 billion ($270 billion) bailout with the previous Greek government.
The troika is made up of the European Commission, European Central Bank and International Monetary Fund.
Greece still has a debt of €315 billion – about 175% of gross domestic product – despite some creditors writing down debts in a renegotiation in 2012.
Alexis Tsipras said Greece would repay its debts to the ECB and IMF, and reach a deal with the eurozone nations that funded most of the bailout package.
“The deliberation with our European partners has just begun,” he said.
“Despite the fact that there are differences in perspective, I am absolutely confident that we will soon manage to reach a mutually beneficial agreement, both for Greece and for Europe as a whole.”
Jeroen Dijsselbloem, chairman of the eurozone finance ministers’ group, said he welcomed Alexis Tsipras’ comments.
“It is now up to the Greek government to determine its position on how to move forward,” he said.
“Further decisions will be taken jointly in the Eurogroup in the coming weeks.”
In interviews in the German media published on Saturday, Angela Merkel said she still wanted Greece to stay in the eurozone but did not “envisage fresh debt cancellation”.
“There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece’s debt,” she told Hamburger Abendblatt.
Greece’s current program of loans ends on February 28. A final bailout tranche of €7.2 billion still has to be negotiated but the new government has already begun to roll back austerity measures.
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