Greece and its creditors publicly blamed one another for an impasse in bailout talks, on the eve of a eurozone finance ministers’ meeting billed as key to their outcome.
Greek Prime Minister Alexis Tsipras lashed at rescue lenders for demanding pension cuts.
“If Europe insists in this incomprehensible option — if its political leadership insists — then they must bear the cost of developments that will not be beneficial for anyone on Europe,” he said after meeting in Athens Wednesday with Austrian Chancellor Werner Faymann.
Greece needs to get more loans from its creditors before June 30, when its bailout program expires and it is scheduled to make a 1.6 billion euro ($1.8 billion) debt repayment to the International Monetary Fund.
European Union officials said they have already made major concessions, dropping a budget surplus target from 3 percent to 1 percent this year.
Athens still needed to come up with a more realistic plan, EU Commission Vice President Valdis Dombrovskis said.
“It is important that the Greek side actually not only communicates what they do not want to do, but also what they do want to do,” he said.
Markets continued to react badly to the news on the talks. The Athens Stock Exchange’s main index sank another 3.2 percent, while the yield on Greece’s two-year bond has soared above 30 percent, a sign investors are more worried about a default.
Also Wednesday, Greece’s central bank issued a dramatic warning in its annual report that, without a deal, the country would face “deep recession (and) a dramatic decline in income levels” that would drive it from the euro bloc and even the EU.
Dombrovskis conceded the EU would consider “less favorable scenarios” when asked about a possible Greek exit, or “Grexit.”
Economists disagree over how bad it would be for the rest of Europe. Many say the region’s defenses against market turmoil have improved in recent years, while others note that nobody really knows what the impact might be — and that uncertainty can be dangerous.
Lenders want Greece to further cut defense spending and massive pension fund subsidies, and raise more money in sales taxes.
Jeroen Dijsselbloem, president of eurozone finance meetings, described the chances of a breakthrough on Thursday as “very small.”
Tsipras’ five-month-old left-wing government wants new terms for its bailout program after previous administrations imposed draconian spending cuts and tax increases for five years.
Those austerity measures helped reduce the public deficit but ravaged the economy and made most Greeks poorer.
An advisory committee set up in parliament by members of the government said Wednesday it had recommended the non-payment of any remaining bailout debt, describing it as “illegal, illegitimate, and odious.”