Athens, May 7

Greek Finance Minister Euclid Tsakalotos called on eurozone countries today to approve his economic reforms and warned of the price of a ‘failed state’ if crucial talks next week ran aground.

“Nobody should believe that another Greek crisis, leading perhaps to another failed state in the region, could be beneficial to anyone,” Tsakalotos said in a letter seen by AFP.

His move came ahead of Monday’s meeting of eurozone finance ministers which Athens hopes will help unlock the next tranche of its 86 billion euros ($95 billion) bailout agreed in July.

“What Greece now needs is a clear statement, of measures... which will help investor confidence that Greece has turned the corner, and that country risk has (finally!) been removed from the agenda,” Tsakalotos said in a letter to the eurozone finance chiefs.

Despite months of discussions, Greece’s reforms have yet to win the backing of all its creditors largely due to differences between the European Union (EU) and International Monetary Fund (IMF).

Greek PM Alexis Tsipras has sought to push through a controversial package of pension and tax reforms ahead of Monday’s meeting as part of a number of painful measures demanded by the EU and IMF in exchange for the bailout.

“The reform on pensions, currently in parliament, addresses in a radical way the sustainability of the system over the long run,” said Tsakalatos.

Greece has been paralysed since Friday by a 48-hour general strike called by trade unions to protest the government’s reforms.

“My government has kept to both the spirit and the letter of our summer agreement,” wrote Tsakalatos, referring to the July deal.

Next week’s meeting was initially scheduled for last month but was cancelled amid disagreements between Athens and the IMF, which has demanded more reforms.

Tensions between Greece’s creditors were also exposed on Friday in a letter obtained by AFP from IMF Chief Christine Lagarde urging eurozone finance ministers to move the much-stalled talks on to the question of debt reduction.

The issue is pressing ahead of a huge Greek payment to the European Central Bank (ECB) due in July, with fears growing that it could default if the issue is not resolved.

Lagarde stressed the need to revise down the goal of Greece achieving a primary budget surplus of 3.5 per cent of GDP in 2018, saying it was ‘counterproductive’ to expect Athens to meet the target.

The IMF also warned there were ‘significant gaps’ in Greece’s reform offers.

Greece’s budget deficit has ballooned as it struggles to keep up with mammoth debt payments, which the IMF believes is unsustainable.