Greek finance minister Yanis Varoufakis has rejected an EU offer to extend the country’s current €240bn (£178bn) bailout, describing the plan as “absurd” and “unacceptable”.
Varoufakis was elected last month as part of Greece’s new anti-austerity Syriza government on a pledge to renegotiate the country’s debts to Eurozone economies after almost five years of loans.
The collapse of negotiations comes with deadlines looming – Greece’s current bailout programme ends on 28 February.
In a press conference after talks ended, Jeroen Dijsselbloem, chairman of the Eurogroup of finance ministers said: “My strong preference is and still is to get an extension of the programme, and I think it is still feasible.”
Dijsselbloem added: “We can use this week, but that’s about it.
“There was a very strong opinion across the whole Eurogroup that the next step has to come from the Greek authorities.”
According to Varoufakis, Greece would have been willing to agree on an offer to prolong the programme for four months previously presented by European Commission economic chief Pierre Moscovici. However, he says the offer has subsequently been withdrawn.
Rather than extending its existing bailout programme, Greece is seeking a short-term loan to allow it to pay off maturing bonds alongside a debt refinancing driven by bonds linked to its GDP.
Despite the collapse of talks, Varoufakis said he was optimistic a deal would still be secured.
“Europe will do the usual trick: It will pull a good agreement or an honourable agreement out of what seems to be an impasse,” he said.