Greece’s coalition government has agreed to austerity measures required in order to qualify for the second bailout package but has reportedly failed to convince lenders.
Four days have passed since party leaders in Athens were given the original deadline to agree on further austerity measures in order to receive a second rescue package, valued at €130 billion (£107 billion).
Without further financial assistance, Greece would have been unable to meet the €14.5 billion in bond repayments due in March.
The euro rose 0.13% against the dollar on the news and 0.5% against the yen. The spread on 10-year Greek government bonds fell slightly to 32.11bps against the bund.
The leaders of the coalition parties have consistently failed to reach an agreement on the conditions relating to the labour force, particularly the subject of the minimum wage and cuts to pensions.
An agreement on further cuts to public spending was reached, amounting to 1.5% of GDP.
Negotiations between the Greek government and private-sector bondholders fell apart earlier this month after failing to reach a consensus on the size of a voluntary haircut on government debt.
Following the fifth review of Greece’s economic performance in December, and the release of about €2.2 billion in funds, Christine Lagarde, head of the International Monetary Fund (IMF), desribed Greece’s “substantial achievements” in reducing its deficit.
Weeks later, Lagarde confessed that she was not “terribly optimistic or positive” about the progress made by Greek authorities so far.