EU warns Greece after IMF pulls out of debt deal talks

Greece’s bailout negotiations were in disarray last night after the International Monetary Fund (IMF) pulled out of the talks, citing a lack of progress on a deal.

News that the IMF's delegation in Brussels had returned to Washington stunned European markets on Thursday evening.

They surged earlier amid renewed optimism about a breakthrough after constructive – though ultimately inconclusive – talks between Greek prime minister Alexis Tsipras and the French and German leaders late on Wednesday in Brussels.

Thursday’s dramatic events followed a day when Mr Tsipras came under acute pressure from creditors to agree a deal.

European Council president Donald Tusk, who has hitherto refrained from commenting on the Greek bailout negotiations, sharply criticised Greece, accusing its government of gambling with the country's future in the euro zone.

No more time for gambling

“The Greek government has to be, I think, a little bit more realistic,” he told reporters in Brussels during the second day of the EU-Latin American summit. “There is no more space for gambling, there is no more time for gambling. The day is coming I am afraid that someone says the game is over.”

His comments were echoed by German central bank president Jens Weidmann, who told a London audience the risk of Greek insolvency was increasing "by the day".

He said while the contagion effects of a Greek exit from the euro were “more contained” than in the past, they should still not be underestimated.

Confirming the decision of the IMF delegation to withdraw from the talks, an IMF spokesman said the ball was now in Greece’s court.

Major differences

“There are major differences between us in most key areas. There has been no progress in narrowing these differences recently,” he said in Washington.

Greece's relationship with officials representing the three creditor institutions – the European Commission, European Central Bank and IMF – have been fraught since Syriza assumed power more than four months ago.

Amid criticism from other euro-zone countries of finance minister Yanis Varoufakis’s negotiating style, the combative minister was removed from the negotiation team in April.

Mr Tsipras held a meeting on Thursday with European Commission president Jean-Claude Juncker, who said the talks had been “important, interesting and friendly”.

Following the meeting, Mr Tsipras repeated comments made following Wednesday night’s meeting with German chancellor Angela Merkel and French president François Hollande, calling for a deal that would ensure Greece’s debts were “viable” while also guaranteeing social cohesion.