European officials are preparing for the worst as Prime Minister Alexis Tsipras' brinkmanship pushes Greece's finances to the limit.
German Chancellor Angela Merkel urged Mr. Tsipras to accept the framework for financial aid as the German public turns against supporting Greece, and eurozone officials demanded a proposal for stabilizing the country's debt by the end of Friday. The International Monetary Fund team left Brussels earlier this week, despairing of Mr. Tsipras' tactics.
In response, Greece ruled out cutting pensions and demanded a debt restructuring. Bank stocks plunged.
“People are really fed up with this,” UniCredit Chief Global Economist Erik Nielsen said in a television interview. “They've never seen anything so completely ridiculous, frankly speaking, from a debtor country.”
After four months going round in circles, diplomatic niceties evaporated in Brussels on Thursday as EU President Donald Tusk rebuked Mr. Tsipras for dragging his feet on a debt agreement. Greece has less than a week to accept the conditions for aid, with the eurozone due to withdraw its financial safety net at the end of the month.
Greek banks fell 11.4% by late afternoon Friday in Athens. Greek bank stocks have lost about 55% since the previous government of Antonis Samaras began to unravel in December. The Athens Stock Exchange index posted its biggest decline in four months, dropping 6%.
Battle lines were drawn Thursday night at a working dinner of EU finance officials that set out the parameters of a likely showdown next week when their bosses meet in Luxembourg.
Greece was given less than 24 hours to come up with firm proposals to end the impasse, two officials present said. That would allow officials to review the plan over the weekend with a view to sealing a staff-level agreement by June 16, the officials said.
“If the Greek government isn't willing to take difficult measures, even if they're unpopular, then Greece will never be saved,” Dutch Finance Minister Jeroen Dijsselbloem, who leads the eurozone finance chiefs' meetings, told reporters in The Hague on Friday. “We've repeatedly explained to the Greeks how little time there still is.”