The International Monetary Fund is pushing Greece to adopt labour reforms as a condition to join an £74billion bailout program, so far funded only by eurozone creditors.
Greece hopes to reach a deal with international lenders in April but Athens says the labour reforms would go against EU principles.
Experts warn Greece could be plunged into crisis if the stalemate continues and prime minister Alexis Tsipras finds the offer unacceptable sparking a summer election.
The snap election could lead to political stalemate, with no decision made on Greece’s future.
“In either of these situations, the possibility of Greece defaulting on its July debt obligations and crashing out of the eurozone would be high.”
“MacroPolis said:”If German Chancellor Angela Merkel decides to wait until after her country’s federal elections in September to agree to any debt relief package, this will likely dent Greek growth hopes in 2017, leading to 2018 being the real year of recovery.
“At that point, in the absence of any political instability, Greece should be able to stay on track and regain market access, allowing it to exit the Memorandum of Understanding when it expires in the summer of 2018.”
Greek debt crisis continues
“However, if the debt agreement is put off further and Berlin refuses to agree any deal before the end of the program, this delay will lead to the economic stagnation Greece saw in 2016 continuing in 2017 and carrying over into 2018.”.
“This will mean that a return to the markets is not possible for Greece and, on expiry of the current program, Tsipras will be forced to sign a fourth bailout.”
It comes as the Greek government told the country’s central bank chief to stay out of politics after he urged it to wrap up a long-delayed bailout review.
Bank of Greece Chief Yannis Stournaras warned the delay in resolving the Greek debt crisis was creating uncertainty and risked forcing a downwards revision of growth forecasts this year.
The Bank of Greece has been projecting 2.5 per cent growth.