Senior European leaders, including German Chancellor Merkel, are due to meet Greek Prime Minister Alexis Tsipras, who has requested top-level crisis talks as his government is running out of cash.
The crisis meeting in Brussels is held on the sidelines of an EU summit and will bring together Greek Prime Minister Alexis Tsipras, German Chancellor Angela Merkel, French President Francoise Hollande as well as the leaders of the EU Commission and the European Central Bank.
The Greek government has requested the meeting to press for more short-term funding to keep itself afloat. Greece has been kept from bankruptcy by two international bailouts but now risks running out of money within weeks if it does not receive more funds.
On Wednesday, Greek banks reported the largest deposit withdrawals in a month, showing that the population is worried that Athens' funding problems might force it to exit the euro currency area.
EU Commission President Jean-Claude Juncker, who is also taking part in the meeting, told France's Europe 1 Radio on Thursday that Greece must undertake the necessary reforms, and needed to ensure that the commitments it made were followed up on.
Merkel remains recalcitrant
German Chancellor Angela Merkel delivered the same message in a speech to parliament ahead of the late-night Brussels talks and a crucial visit by Tsipras to Berlin next Monday. She told German lawmakers that the crisis could only be overcome if Greece stuck to agreements.
Merkel also said, however, that no one should expect a solution from Thursday's session or her meeting with Tsipras next week, which offered "time to talk to each other in detail and perhaps also to argue."
"There is still a very tough road ahead," Merkel said. Greece must understand that international aid brought with it an obligation "to reform its budget and work towards one day no longer needing help."
Liquidity problems mounting
However, EU sources said Greece had refused to provide any update on public finances or reform plans in a conference call of senior eurozone officials on Tuesday. Moreover, it had denied its bailout lenders access to government buildings, insisting all meetings take place in a hotel.
The discussions, held between government officials and experts from the EU Commission, the International Monetary Fund (IMF) and the European Central Bank, had not gone beyond procedural issues of who would be allowed to talk to whom, the sources said.
Deputy Prime Minister Yannis Dragasakis in a television talk show early on Thursday accused the creditors' team of exceeding their authority. "The technical teams came to collect facts, but they then requested things which went beyond their jurisdiction. For example, they wanted to review the government as a whole, every ministry's program and the reforms," he told Alpha TV.
Dragasakis acknowledged Greece faced a liquidity problem and needed the cooperation of its European lenders to keep paying salaries, pensions and debt repayments: "We haven't received any [bailout] tranches since August 2014, but we have been meeting all of our obligations," he said. "This has its limits."
The ECB agreed late on Wednesday to raise the limit on emergency lending to Greek banks by 400 million euros to 69.8 billion, banking sources said. Bankers said savers withdrew about 300 million euros in deposits on Wednesday.
European Parliament President Martin Schulz said Greece's financial situation was "dangerous" and it needed 2-3 billion euros in the short term to avoid bankruptcy. "Time is short," he told German radio. "So it would be good if Greece fulfils the obligations that it has agreed to, then further money will flow."
Greece has asked to receive some 1.9 billion euros in ECB profits on Greek bond holdings, which finance ministers have linked to progress in implementing the program. It also wants ECB permission to issue more short-term treasury bills, which only Greek banks are willing to buy.
The chairman of the Eurogroup of EU finance ministers, Jeroen Dijsselbloem, hinted this week that Greece might have to introduce capital controls restricting cash withdrawals if financial stress got worse.
German Finance Minister Wolfgang Schäuble has warned that the risk of an accidental Greek exit from the eurozone, known as 'Grexident', is rising, while insisting that Berlin wants to avoid that.
uhe/pad (AFP, dpa Reuters)