-Yanis Varoufakis, Greece's Finance Minister
European officials failed to reach an agreement over a new Greek debt deal after less than four hours of talks in Brussels, as Athens rejected an offer to ask a six-month extension of its international bailout package. It is the second time in recent days that negotiations between the Greek government and Eurogroup have collapsed, reinforcing concerns that Greece is moving closer to a disruptive exit from the Euro zone. Nevertheless, Greece still has some time to accept the proposal of prolonging the bailout programme, which includes a list of austerity measures that the new Greek left-wing government has pledged to pare back. Otherwise, the Greek government and its banks would face a looming cash crunch. Greece's Finance Minister, Yanis Varoufakis, however, made it clear that the country would not accept the proposal unless other 18 Euro zone member states agreed to water down the austerity and economic reform requirements attached to the deal.
Greece's current financing arrangements expire at the end of the month, but many Euro zone parliaments would require several days to ratify any extension of the bailout. Athens, however, has said it has enough funding to keep the government running for couple of months, whereas some Euro zone officials see Greece running short of cash next month. Also, the ECB will decide on Wednesday whether to maintain emergency lending to Greek banks that are bleeding deposits at an estimated rate of 2 billion euros a week.
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