Business

Greece creditor talks break off

Euro and drachma coins plus Greek flag
Image caption Fears that Greece will leave the euro have calmed down

Talks between Greece and its international creditors over the release of the country's next slice of bailout cash have broken off for two weeks.

The creditors, known as the troika, are demanding further reforms and improved tax collection in return for the loan.

Greece is due to get the next 2.8bn euros (£2.4bn; $3.6bn) tranche of its bailout funds at the end of the month.

Greece has been struggling with years of spending cuts and tax rises.

The troika officials from the European Commission, European Central Bank and International Monetary Fund held a three-hour meeting on Wednesday with Greek Finance Minister Yannis Stournaras and Prime Minister Antonis Samaras, but they broke off talks and Mr Stournaras said the troika would return in late March or early April.

The country had to seek the bailouts to meet its debt repayments and budget shortfalls after years of overspending led private sector lenders to refuse to lend the country any more.

Greece was promised a total of 240bn euros from two bailouts and has received the majority of that - thereby lowering fears that Greece would have to exit the euro.

The meeting was delayed by a day, reportedly over disagreements between the two sides, according to the BBC's Athens correspondent Mark Lowen.

"In reality, Greeks are growing as tired of protests as they are of austerity. A nation crippled by six years of recession is crying out for some light at the end of the tunnel. And Greece's creditors know that there is only so much more that this country can take."

Greece has to reduce its debt down to a sustainable level. It currently stands at around 149% of gross domestic product (GDP), while the target set by the troika is 124% of GDP by 2020.

Italian debt

Separately, Italy on Wednesday had to pay its highest interest rate since December to borrow for three years at a debt auction.

The three main political forces are sharply divided after none managed to win an outright majority, with uncertainty over the future management of the eurozone's third-biggest economy causing concern among Italy's partners and shaking investor confidence.

It comes after credit rating agency Fitch downgraded Italy to BBB+ last week, just three notches above so-called "junk" territory, following an inconclusive election earlier this year that has yet to be resolved.

The Italian Treasury paid a yield of 2.48% to sell 3.3bn euros of three-year bonds, up from 2.3% at a similar sale in February, and the highest rate since December.