The Greek prime minister, Alexis Tsipras, has warned that time is running out to rescue the country from the brink of bankruptcy an and exit from the eurozone, ensuring that Greece’s plight will be a pressing concern for G7 leaders as they gather in Bavaria.

With the end of June now regarded as the last possible moment for striking a deal to release the €7.2bn (£5.2bn) in bailout funds that Greece needs to stay afloat, Tsipras struck a defiant tone in a statement before the country’s parliament, accusing Greece’s creditors of making “absurd” demands on his recession-hit country and insisting, “they won’t humiliate us”.

Tsipras also appealed to the Greek opposition parties – and his own Syriza MPs – to give their backing to his negotiating stance and reject the latest proposals from the country’s paymasters.

“Time is not only running out for us, it is running out for everyone,” he warned, adding, “Greek people should be proud because the government is not going to give into absurd proposals.”

He also insisted that a debt restructuring – writing off some of the €320bn that Greece owes – must remain on the table.

US officials, including the Treasury secretary, Jack Lew, have repeatedly warned their European counterparts not to be complacent about the economic risks of a so-called Grexit, and President Obama is likely to reiterate that argument this weekend. The US president is likely to be particularly concerned that Greece could turn to Russia for aid. Tsipras underlined that risk on Friday by letting it be known he was holding a phone conversation with Russian president Vladimir Putin.

In the Greek parliament, Antonis Samaras, leader of the opposition New Democracy party, accused Tsipras of mishandling the negotiations and tipping Greece back into recession. “You have totally destroyed the country and isolated us,” he said.

Analysts said Tsipras’s firm public rejection of the creditors’ latest proposal made it hard to envisage a deal emerging. Nick Spiro, of Spiro Sovereign Strategy, said it was, “difficult to see a basis for further negotiation”, given that Greece and its paymasters were already “at daggers drawn”.

The German chancellor, Angela Merkel, is thought to favour a compromise in the talks between Greece’s radical leftist government and its lenders, but the International Monetary Fund has argued for a tougher stance.

Tsipras went to the Greek parliament to explain his stance last night, after Athens took the risky decision to delay a €300m payment to the IMF.

In a highly charged parliamentary session, Tsipras condemned the proposals tabled at a late-night meeting in Brussels on Wednesday.



A leaked draft of those proposals called on Athens to make pensions cuts, raise VAT and cancel the planned repeal of controversial labour market reforms imposed as part of its original bailout deal.

All of these demands are unacceptable to Tsipras and to many in his party. He had hoped to return to Brussels to continue negotiations on Friday but a furious response from his Syriza colleagues forced him to remain in Greece and make the case for continuing to engage in the negotiations.

Greek share prices were sold off sharply as investors absorbed the news that Athens had refused to make the IMF payment, a decision that emerged after markets closed on Thursday night. The Athens general composite index fell by almost 5%, with banks hit particularly hard.

Athens exploited a little-known loophole in IMF rules and announced that it would bundle up four debt repayments into one lump sum at the end of the month.

The ratings agency Fitch confirmed on Friday that Greece’s decision to postpone the payment would not jeopardise its credit rating, which has already been cut to CCC over the course of the crisis.

Fitch warned: “The risk that Greece misses its larger IMF payment at the end of June cannot be discounted,” adding that Athens’ decision “illustrates the pressure that a lack of market or official funding and tight liquidity conditions for Greek banks are putting on Greece’s sovereign liquidity”.

A group of high-profile economists, including the Nobel prizewinner Joseph Stiglitz and John Maynard Keynes’ biographer Robert Skidelsky, also wrote a letter to the Financial Times calling for Greece to be granted debt forgiveness, starting with an immediate moratorium on repayments in return for economic reforms. “We think that the whole of Europe will benefit from Greece being given the chance of a fresh start,” they said.