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Greek Prime Minister Alexis Tsipras is preparing to address lawmakers after raising the stakes in his country’s showdown with creditors by rejecting demands for more austerity and opting for a deferral of IMF payments.

He plans to speak to parliament later Friday after telling German Chancellor Angela Merkel and French President Francois Hollande during a call Thursday that a list of proposals needed to unlock bailout funds hammered out earlier this week by creditors can’t be a basis for a deal. German and French officials declined to comment on the contents of the talk.

The Greek decision to bundle upcoming International Monetary Fund payments and transfer them all at the end of the month was a 180 degree turn by the government and caught many by surprise. Even though deferring the payments doesn’t amount to a default, it may heighten tensions between Greece and its creditors. Tsipras told reporters as late as Wednesday not to worry about Greece making the Friday payment, and IMF Managing Director Christine Lagarde said earlier on Thursday that such a move wasn’t in the cards.

“The delay in the payment to the IMF is an escalation of the confrontation,” said Nicholas Economides, an economics professor at New York University’s Stern School of Business. “It increases the risk of bankruptcy and a Grexit.”

The benchmark Athens Stock Exchange plummeted 5 percent on Friday, the most since January. The yield on Greek 10-year bonds added 31 basis points to 11.22 percent, the biggest increase since May 26. The 10-year yield is still down from this year’s high of 13.93 percent and a record 44.21 percent in 2012. The two-year yield rose 198 basis points to 25.22 percent.

Bundling Payments

Greece notified the IMF on Thursday that the 300 million-euro ($337 million) payment due Friday would be deferred and bundled with three more payments at the end of June. While bundling the transfers doesn’t constitute a breach of IMF rules, the deviation from standard practice adds to signs that Greece may be readying for a potential breakdown of talks after a four-month-long impasse.

The government issued no official confirmation of the bundling request. The delay wasn’t related to a lack of funds as Greece has enough cash reserves to make the payment due Friday, said a person familiar with the country’s financing position. The official asked not to be named as he wasn’t authorized to discuss the matter publicly.

“If they come up with alternatives on our proposal, it should be financially correct and wise from an economic perspective,” Jeroen Dijsselbloem, who leads the euro-area group of finance ministers, said in the Hague. “We’re waiting for their reaction. We were hoping to get it by today.”

Multiple Calls

Merkel and Hollande have spoken with Tsipras several times over the last week to try and resolve the standoff. The conversations “naturally are constructive,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin. He declined to comment on the substance of Thursday’s call.

Tsipras also spoke Friday by phone with Russian President Vladimir Putin to discuss Greece’s participation in an investment bank for BRIC countries, a Greek official said.

As the stalemate drags on the odds of Greece exiting the euro area have risen to about 20 percent from between 10 percent and 15 percent previously, Royal Bank of Scotland Group Plc estimates. The nation is likely to hold new elections, during the course of which support for the single currency may wane, the bank said.

“Elections now appear very likely,” RBS strategists including Marco Brancolini wrote in a note to clients Friday. “Either PM Tsipras will opt to force the measures through (likely triggering a collapse in his parliamentary majority) or go to new elections.”

Public Opinion

Half of Greeks said the Syriza-led government should abandon its so-called red lines if creditors don’t accept them in order to have an agreement, according to a poll published Friday by the newsit.gr website. Almost the same number, 47 percent, said they disagree with the way the government is conducting negotiations. A strong majority, 74 percent, of those polled said they wanted Greece to remain in the euro. The poll was conducted on June 3 to June 4.

“The agreement and solution which both Greece and Europe so badly need requires the immediate convergence of institutions to more realistic proposals, which will advance economic growth and social sensitivity,” the Greek Finance Ministry said in a statement.

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(Updates markets in fifth paragraph.)