Eurozone leaders will hold an emergency summit to try to avert a Greek default today, after a meeting of finance ministers failed to reach a breakthrough.

The finance ministers of the 19-nation currency bloc failed to make any breakthrough on a cash-for-reforms agreement at talks in Luxembourg, just 12 days before Greece must make a crucial debt repayment to the International Monetary Fund (IMF).

“Regrettably … too little progress has been made. No agreement is in sight,” chairman of the Eurogroup Jeroen Dijsselbloem told a news conference.

Ministers sent a strong signal that it is up to Greece to make new proposals, he said.

European Council president Donald Tusk said in a statement he had summoned heads of state and government of the euro area to meet in Brussels at 7:00pm (local time) on Monday.

“It is time to urgently discuss the situation of Greece at the highest political level,” Mr Tusk said.

There is no grace period or two-month delay, as I have seen here and there.
German and EU officials dismissed a German newspaper report that the creditors were preparing a final offer to extend Greece’s bailout program until the end of the year without IMF involvement, and let Athens use $14.58 billion in aid earmarked for bank recapitalisation to pay off liabilities to the European Central Bank and the IMF.

Mr Dijsselbloem said if there was a last-minute deal next week, there would have to be some extension of the current bailout to allow time for disbursement.

GREEKS WITHDRAW $3 BILLION FROM BANKS

Greek savers pulled out some $3 billion between Monday and Wednesday after weekend negotiations collapsed in Brussels, senior banking sources said.

That is double the amount that the European Central Bank granted Greek banks in extra emergency liquidity assistance (ELA) this week.

The IMF dashed any hope that Athens could avert default if it fails to repay a $2.3 billion loan by the end of June, piling pressure on prime minister Alexis Tsipras, who shows no sign of yielding to the lenders.

If deposit flight continues to outpace ELA, it could force Greece to impose capital controls, as Cyprus did in 2013, to ration cash withdrawals and stop money fleeing the country.

The $3 billion taken out in just three days represents about 1.5 per cent of total household and corporate deposits of $194.7 billion held by Greek banks as of the end of April.

A finance ministry spokesman declined to comment on the latest capital outflows.

A government spokesman said on television late on Wednesday there was no plan to introduce controls.

Mr Tsipras, elected on a promise to end austerity, is demanding a “political-level” bargain in which European creditors promise Greece debt relief before he will make any more concessions.

But the deposit flight and revenue slump may force him to climb down, with the Greek central bank warning of economic catastrophe if Greece defaults and leaves the eurozone.

IMF BOSS CLOSES POTENTIAL ESCAPE HATCH

IMF boss Christine Lagarde closed one of Greece’s last potential escape hatches, declaring that the global lender would consider Athens in default if it misses the June payment, despite reports there might be some leeway.

“It will be in default, it will be in arrears vis-a-vis the IMF on July 1, but I hope it is not the case, I really do,” Ms Lagarde told reporters in Luxembourg.

“There is no grace period or two-month delay, as I have seen here and there.”

Greece confirmed on Wednesday that the government did not have the money to repay the IMF loan, the first in a series of debt repayments due over the middle of the year.

Mr Tsipras – pointedly visiting Russia at a time of sour relations between Moscow and the EU – insisted creditor demands for pension cuts would worsen the economic crisis.

In a guest column for Der Tagesspiegel newspaper in Berlin, he sought to dispel what he called a “myth” that German taxpayers were paying Greek pensions and wages.

“The blind insistence of cuts [in pensions] in a country with a 25 per cent unemployment rate and where half of all the young people are unemployed will only cause a further worsening of the already dramatic social situation,” he said.