Greece resumes debt talks with creditors

Greece on Thursday resumed talks with its international creditors on critically-needed bailout funds, as officials warned that time was running out for a deal.

Prime Minister Alexis Tsipras expressed optimism for a deal which would respect enough of his government's anti-austerity agenda to be politically acceptable at home, state agency ANA said.

"I am optimistic that we are close to an agreement that will move within the framework of the popular mandate we received and which will be defined by the 'red' lines we have set," Tsipras told the cabinet according to government sources, ANA said.

The same sources said the government wants an agreement by May 11 or even earlier and left open the possibility that Athens will request an emergency meeting of the Eurogroup on the issue.

European Commission spokesman Margaritis Schinas earlier told reporters that the talks in Brussels were "held in a constructive spirit...we welcome this step to deepen and intensify contacts."

Another EU source said the talks would run non-stop until Sunday.

Greece needs a deal to unblock 7.2 billion euros ($8 billion) from its EU-IMF bailout before state coffers run dry.

Tsipras' hard-left government, elected in January on an anti-austerity agenda, is struggling to pay salaries and pensions without the promised loans.

Greece needs to repay almost a billion euros in debt and interest to the IMF by May 12.

The European Union and International Monetary Fund want Athens to carry out reforms pledged by previous administrations before it releases the final tranche of rescue funds.

"To conclude the review with the IMF, we need a comprehensive package. We cannot conclude the review with just a few measures,"  the global lender's spokesman Gerry Rice told reporters in Washington.

But the Greek government, in office for three months, insists it will not back down from 'red lines' on labour protection and wage cuts.

A Greek government source on Thursday said Athens wanted a deal without austerity "crimes" against the Greek people.

The official added that Athens would not back down on labour issues, income cuts, the sale of state assets at whatever cost and a hike in VAT.

"The government does not have a public mandate to bring a deal outside the red lines, and for this reason it will not do so," the Greek official added.

The government, according to the Wednesday edition of Greek daily Kathimerini, has proposed measures generating around 1.3 billion euros in new revenues, including alternative tax proposals sparing the poor.

Proposals on the list include higher taxes on the very rich and on luxury goods, the sale of TV licences, and a more effective fight against those operating in black markets, Kathimerini said.

Greek daily Ta Nea reported Thursday that other measures include additional taxes for hotels, high-end bars and restaurants on Greek island tourist destinations during peak travel seasons.

It is unclear, however, whether the package addresses contentious topics such as the liberalisation of the labour market, raising value-added tax, or the thorny issue of cutting state pensions -- all of which have been pushed by the IMF, and rejected by the Tsipras government so far.

- Make some compromises -

"The Greek government is ready to accept an honest solution with its creditors that will allow financial aid to be unblocked, and to end the financial asphyxia caused by the memoranda," Greek Finance Minister Yanis Varoufakis told radio station Sto Kokkino, referring to hated austerity measures imposed by Greece's creditors.

Yet Greek junior foreign minister Euclid Tsakalotos -- who on Monday was tapped to replace the defiant and controversial Varoufakis to head Greece's team of negotiators -- noted that while Athens will not cross the "red lines" it has laid down in talks, it was prepared to be flexible elsewhere.

"When you have a political plan, you can find solutions and make some compromises," he said.

But the Syriza-led government, elected in January on an anti-austerity platform, has resisted demands for sweeping reforms and privatisations and to honour a series of heavy loan repayments due this summer.

A new sign of concern over the government's resistance to that pressure came Wednesday, when ratings agency Moody's cut Greece's credit grade further into junk territory to Caa1.

It also assigned Greece a negative outlook due to Athens' continuing inability to reach a deal with its EU-IMF partners.