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Crunch time looms in Greek debt crisis

Left government faces rising pressure to betray its supporters

by Our Foreign Desk

GREEK Finance Minister Yanis Varoufakis claimed yesterday that he would not sign up to demands that Greece could not meet, even as creditors continued to refuse to release frozen bailout aid.

Speaking in Washington on the fringes of the International Monetary Fund (IMF) spring meeting, Mr Varoufakis said: “We are going to compromise, compromise, compromise, but without being compromised.”

Athens has expressed a willingness to do a deal on reforms required by its lenders the International Monetary Fund, the European Union and the European Central Bank.

But there was no sign of compromise, compromise, compromise yesterday as the two sides set out apparently ironclad positions on the sidelines of the meeting, with IMF chief Christine Lagarde dismissing any suggestion that Greece could be granted a debt repayment holiday.

European Commissioner for economic and financial affairs Pierre Moscovici has set the May meeting of eurozone finance ministers as the decisive moment for Greece to agree economic reforms or face possible default.

He confirmed yesterday that there was little chance of a deal next week.

Insisting there was no plan B regarding exit from the eurozone, he called on Greece to speed up discussion of a list of reforms it has submitted that, if agreed, would unlock the remaining €7.2 billion (£5.2bn) of bailout loans.

The main stumbling blocks include changes to pensions and employment rights, which Athens has pledged to protect.

Ms Lagarde has insisted that the Greek pension system is not sustainable and has also pushed for a shake-up of its tax system and market regulations to promote competition.

The Syriza-led government, elected on an anti-austerity platform, may have to choose whether to pay salaries and pensions or repay IMF loans of £720 million.

Greece’s situation worsened on Wednesday when credit ratings agency Standard and Poor’s downgraded Greek debt to CCC+ from B- with a negative outlook, which means junk status.

Pressures on the Greek government to betray its supporters and abandon its mandate are growing and there are few options left for Mr Varoufakis, given his open commitment to remaining within the EU.

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