The International Monetary Fund dramatically raised the stakes in Greece’s stalled debt talks on Thursday, announcing that its delegation had broken off negotiations in Brussels and flown home because of major differences with Athens.
The surprise IMF announcement came as the European Union told leftist Greek Prime Minister Alexis Tsipras bluntly to stop gambling with his cash-strapped country’s future and take crucial decisions needed to avert a devastating default.
A Greek source told Reuters that the entire Greek delegation that had been negotiating a cash-for-reform deal had left Brussels for home on Thursday, citing outstanding disagreements.
“There are major differences between us in most key areas,” IMF spokesman Gerry Rice told reporters in Washington. “There has been no progress in narrowing these differences recently and thus we are well away from an agreement.”
Greece needs a deal to unlock aid before the end of the month when it is otherwise set to default on a 1.6 billion euro ($1.80 billion) repayment to the Washington-based IMF.
That could trigger capital controls and possibly send Greece hurtling toward an exit from the euro zone, with unpredictable consequences for financial markets and the European economy.
Rice said the key sticking points remained pensions, taxes and financing. The IMF technical team had returned to the United States but remained “fully engaged” with Athens.
European stocks fell after the IMF comments.
Earlier, European Council President Donald Tusk spelled out an unprecedentedly forthright message to Greece’s radical anti-austerity government after four months of bitter negotiations.
“There is no more time for gambling. The day is coming, I’m afraid, that someone says that the game is over,” he told a news conference after chairing an EU-Latin America summit that was dominated by intense talks with Tsipras on the sidelines.
“It is very obvious that we need decisions, not negotiations,” Tusk said, adding that Athens needed to be “more realistic.”