Athens says creditors' proposal cannot be accepted

People look at newspapers displayed at a kiosk in Athens, Greece, on Friday, June 26, 2015.
People look at newspapers displayed at a kiosk in Athens, Greece, on Friday, June 26, 2015.PHOTO: BLOOMBERG

ATHENS (AFP) - Athens rejected Friday the latest proposal from its creditors for a five-month €12 billion (S$18 billion) bailout extension, arguing the reforms demanded alongside it would be recessionary and the funding insufficient.

"The creditors' proposal to the Greek government would require introducing deeply recessionary reforms as a condition for the funding, which is totally inadequate over the five months period," said a statement in response to the offer of a cash lifeline, adding the government "cannot accept" the institutions' proposals.

Greece's international creditors - comprising the European Commission, the European Central Bank and the International Monetary Fund - have offered Athens the extension to its bailout programme, but said it must seal a deal this weekend to avoid an IMF default early next week.

They will disburse the first €1.8 billion in financial aid to help Athens meet the crucial IMF loan repayment of €1.5 billion due Tuesday - but only if the Greek parliament votes in favour of a reform deal, according to a leaked document.

The rest of the funds would be paid according to the implementation of certain reform measures.

"It is clear that the institutions' proposal, even if we do not take into account the recessionary and socially destructive measures, leaves a significant funding gap for the five-month extension period," the Greek statement continued.

"Even more disturbingly (this) would lead to another difficult negotiation," it said, adding that would likely trigger a new wave of austerity "at the end of the year".

The strongly-worded statement came after Greece's radical leftist Prime Minister Alexis Tsipiras said he refused any take-it-or-leave-it offers from his EU partners - and vowed to remain true to his anti-austerity principles despite the financial abyss looming just days away.

Syriza party leader Tsipras was elected in January on an anti-austerity platform and has resisted ever since the creditors' demands for pensions cuts and VAT reforms in return for unlocking bailout funds.