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Greece says deal on debt crisis unlikely at Thursday talks

Greece"s Finance Minister Yanis Varoufakis — Mr Varoufakis said a deal would have to be reached at the level of heads of state and government

Greek Finance Minister Yanis Varoufakis has said that a meeting of eurozone finance ministers on Thursday could "set the scene" for a deal between Greece and its creditors.

But he said an immediate solution to the crisis was unlikely.

In return for more funding, creditors want further reforms from Greece.

But the ruling Syriza party is resisting those demands and, with talks deadlocked, fears are growing that Greece may default on its debts.

The European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) could extend fresh finance, but are insisting on reform and further austerity measures.

Mr Varoufakis, when asked if there could be an agreement at the meeting of eurozone finance ministers in Luxembourg on Thursday, said: "I do not believe so."

"Tomorrow we will set the scene for what we consider to be our political and moral duty, and that is to reach an agreement very, very quickly with our partners and the institutions," he said.

On Wednesday Greece's central bank warned that the country could be on a "painful course" to default and exit from both the eurozone and the EU.

null — Greece has seen regular protests against austerity measures

The Bank of Greece also warned that the country's economic slowdown would accelerate without a deal.

"Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and, most likely, from the European Union," it said in a report.

The bank added that about €30bn was withdrawn from Greek bank deposits between October and April.

Greece - deal or no deal?

Option 1: No deal: Greece defaults on IMF and ECB repayments; ECB pulls plug on emergency bank assistance leading to run on Greek banks, capital controls and potential Grexit
Option 2: Greece agrees reform deal with creditors at last minute and avoids default, staying in euro
Option 3: No deal reached but both sides paper over cracks and Greece stays in euro for now

Greece has two weeks remaining to strike a deal with its creditors or face defaulting on an existing €1.6bn (£1.1bn) loan repayment due to the IMF.

The country has already rolled a €300m payment into those due on 30 June.

Peston: Will ECB keep Greece afloat?

BBC Europe correspondent Chris Morris says that both Greece and its creditors appear to be waiting for the other side to make the next move - and all the while the risk of miscalculation, or of waiting too long, increases.

Tensions between the two sides became clear on Tuesday during a news conference held by European Commission President Jean-Claude Juncker.

Mr Juncker, who had been seen as more sympathetic to the Greek government, said that Athens was responsible for the deadlock.

"I am blaming the Greeks for telling things to the Greek public which are not consistent with what I told the Greek prime minister," he said.

Greek Prime Minister Alexis Tsipras did call Mr Juncker on Wednesday and they agreed to talk further, but did not set a date, according to the AFP news agency.

Greek debt talks: main sticking points

Greece will not accept cuts to pension payments or public sector wages, saying two-thirds of pensioners are either below or near the poverty line
International creditors want pension spending cut by 1% of GDP - it accounts for 16% of Greek GDP. They say their target is early retirement not individual pensions
EU officials say Greece has agreed to budget surplus targets of 1% of GDP this year, followed by 2% in 2016 and 3.5% by 2018. Greece says nothing is agreed until everything is agreed
Creditors also want a wider VAT base; Greece says it will not allow extra VAT on medicines or electricity bills
Greece complains creditors focus on increasing taxes instead of cracking down on tax evasion; IMF is concerned Athens is not offering credible reforms

Is Greece close to Grexit?

On Thursday attention will also be focused on a speech by German Chancellor Angela Merkel to the German parliament at 09:00 local time (07:00 GMT).

Mrs Merkel is under pressure from politicians in her own coalition to take a hard line with Greece.

On Wednesday Andreas Scheuer, the secretary-general of the CSU party, said the Greek government had not "realised the seriousness of the situation yet".

In an interview with Rheinische Post newspaper he said: "They are behaving like clowns sitting in the back of the classroom, although they have received explicit warnings from all sides that they might fail to pass to the next grade."

On Wednesday's German Foreign Minister Frank-Walter Steinmeier said Greece did not want to present new proposals at Thursday's meeting of finance ministers, which "means time is even more pressing".

Greek shares fell sharply again on Wednesday. The Athens General Index closed 3.2% lower which takes its loss for the past four trading sessions to almost 19%.