Greece reacted with dismay to a failure by European finance ministers to agree to release up to €44 billion (HK$436 billion) of rescue loans it vitally needs, with the prime minister warning that the stakes are higher than his debt-ridden country's future.
After 12 hours of debate into the early hours yesterday, finance ministers from the 17 EU countries that use the euro, together with the International Monetary Fund and European Central Bank, again failed to reach a deal on Greece's financing. The impasse follows another fruitless meeting last week and highlights the depth of divisions among European governments over how to handle the Greek debt without reaching deeper into the pockets of their own taxpayers.
"Greece has done what it had to and what it had committed to doing," Prime Minister Antonis Samaras said. "Our partners, along with the IMF, also must do what they have undertaken."
But Greece is already living on borrowed time. Faced with €5 billion in maturing treasury bills that it could not pay last week, Athens issued more short-term debt to tide it over until it can receive its bailout funds. But most of that was in the form of four-week treasury bills, meaning the country will face the same situation next month - when it has more than €7 billion in redemptions - unless the loans come through.
"It is not just the future of our country, but the stability of the entire euro zone that depends on the successful completion of this effort in the coming days," Samaras said.
"Whatever technical difficulties there might be in finding a technical solution do not excuse any delay," he said.
Greece has been relying on rescue loans from other euro-zone countries and the IMF since May 2010, after a massive budget gap and spiralling national debt left investors too wary of buying its bonds on the international market.
In return, the country has had to impose several rounds of austerity measures, included repeated salary and pension cuts and increased taxes. The belt-tightening has left Greece mired in a deep recession expected to head into a sixth year.
The government also hoped to see outstanding funds from previous loan installments, and a batch originally earmarked for December, bringing the total expected to €44.6 billion.
But there has been disagreement among the euro zone's ministers and the IMF on how to make Athens' debt manageable. The euro-zone ministers favour giving Greece an extra two years - to 2022 - to bring its debt down to 120 per cent of gross domestic product, from the 176 per cent forecast for this year. The IMF has resisted such an extension.
German Chancellor Dr Angela Merkel said she saw a chance for a deal to release emergency aid for Greece at a meeting of European finance ministers on Monday, but rejected the idea that big bold actions could solve Europe's crisis overnight.
Additional reporting by Reuters