Greek creditors refuse to release bailout funds

Eurozone finance ministers said the Greek Government had failed to produce a programme of economic reforms that was enough to unlock the vital funding

Once again European creditors refused to release the bailout cash the Greece is owed (AFP/Getty Images)

Greece's European creditors refused, once again, to release the €7.2bn (£5.1bn) of bailout cash the country is owed, pushing Athens another step closer to a disastrous sovereign default.

As widely expected, eurozone finance ministers, meeting in the Latvian capital of Riga, concluded that the Greek Government had failed to produce a programme of economic reforms that was enough to unlock the vital funding.

“A comprehensive deal is necessary before any disbursement can take place” said the Dutch finance minister and Eurogroup chair, Jeroen Dijsselbloem, in the wake of the meeting, which lasted little more an hour. “We are all aware that time is running out.”

However, the Greek finance minister Yanis Varoufakis gave a more optimistic interpretation of the meeting. “We agreed that an agreement will be difficult but it will happen and it will happen quickly because that is the only option we have,” he told a news conference.

Greece is running out of money. Earlier this week Athens was forced to requisition the cash reserves of Greece’s local governments in order to meet its financial liabilities. It managed to make a €450m payment to the International Monetary Fund earlier this month, but another €800m payment is due on 12 May and doubts are growing over whether Athens will be able to scramble the cash together.

Mr Dijsselbloem said yesterday that the finance ministers would review progress again on 11 May, the day before the key IMF payment.

Before the meeting Mr Varoufakis had appeared to offer some concessions. He said in a blog post that he was open to some privatisations and to an independent commission to supervise tax collection. However, he rejected more wage or pension cuts and said creditors must agree on a realistic target for the primary budget surplus before debt service.

“Our Government is eager to rationalise the pension system [for example, by limiting early retirement], proceed with partial privatisation of public assets, [and] create a fully independent tax commission,” he wrote.