Greek prime minister Alexis Tsipras has told parliament that he would not accept an agreement with lenders that did not include the promise of debt relief that has been his government's long-standing demand.
Photo: Greek prime minister Alexis Tsipras told parliament the debt repayment proposal posed by lenders is 'absurd'. (Reuters: Alkis Konstantinidis)Greece's Eurozone and International Monetary Fund (IMF) creditors have been resisting efforts to include debt relief in negotiations to unlock aid.
Mr Tsipras also reiterated he would not accept a new bailout when the current one expires at the end of June.
Mr Tsipras earlier told the chamber that he could not accept an "absurd" cash-for-reforms proposal tabled by the Eurozone and the IMF, but he still expressed confidence a deal could be found.
"This government and this parliament is not going to vote a new bailout," Mr Tsipras said.
He said that Greece was now facing a level of "liquidity asphyxiation we have never had before".
Opinion polls published on Friday show around three out of four Greeks want to remain in the Eurozone.
More want their government to accept the offer from European and IMF creditors than want them rejected. But Mr Tsipras, elected on promises to end austerity, was defiant.
"The Greek government cannot consent to absurd proposals," Mr Tsipras told parliament.
"I want to believe that this proposal was a bad moment for Europe or at the very least a bad negotiating trick and will soon be withdrawn by the masterminds themselves."
The deal tabled by lenders crossed many of his government's "red lines", including tax hikes, privatisations and a cut to benefits for poor pensioners.
Greece sent its own 47-page compromise proposal to lenders this week, calling for low primary surplus targets and a reversal of labour and pension reforms enacted at the behest of international lenders in recent years.
Mr Tsipras said that remained the only "realistic" proposal on the table.
He said he was confident that "a deal was closer than ever before" since the Greek proposal took the needs of lenders into account, but time was running out for both sides.
Urgent deal needed as bailout soon to expire
Greece's bailout expires at the end of June and if no cash-for-reforms deal is done by then, default would seem certain, shunting the Eurozone into uncharted waters and opening the way for Greece to exit the single currency.
The prime minister was speaking after Athens delayed a 300-million-euro payment due to the IMF — a highly unusual step that rattled financial markets, but one that does not yet signal a formal default.
It was the first time in five years of crisis that Greece had postponed a repayment on its 240-billion-euro bailouts from Eurozone governments, the European Central Bank and the IMF.
European stocks fell and Greek bond yields shot higher as investors worried that four months of bitter negotiations between Greece and its international creditors might yet end in failure.
Mr Tsipras said he was shocked that after five years of austerity the lenders would make demands like abolishing a small benefit for low-income pensioners and imposing a 10-percentage-point rise in electricity tax.
His leftist government says overly harsh austerity policies imposed by lenders in bailout packages have deepened one of the worst depressions in modern times.
Earlier on Friday a Greek deputy minister said Athens may call fresh elections as the only way to break the impasse and secure public legitimacy for the difficult decisions needed to secure more cash.
In what appeared to be a threat that Greece was prepared to move unilaterally if its demands were not met, Mr Tsipras said the government would legislate the restoration of collective bargaining rights for Greek workers — a move opposed by lenders.
Many analysts expect a last minute aid deal that would avert a Greek exit from the euro but say the coming weeks could see further ructions in Greek politics, keeping markets on edge.
Time is running out to clinch a deal and get further disbursements approved by EU national parliaments, some of which have appeared reluctant to offer Greece much budget slack, before the bailout program expires.
With Europe's big powers and the United States concerned about the unpredictable outcome as Greek reserves shrink toward zero, sources said the creditors had showed some flexibility this week by lowering the budget surplus that Athens will be required to run before debt service payments.
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