After a week of marathon talks Greece has failed to reach a deal with its international creditors on Thursday, setting up a last-ditch effort on Saturday to avert a default next week.
The EU summit had been due to focus on migration but Greece thrust its way onto the agenda. Discussions about Greece lasted around two hours during the first day of the summit.
Following the first day of the ongoing summit, German Chancellor Angela Merkel said early on Friday that eurozone finance ministers would "have to keep working" in the coming days "because time is pressing."
"All the leaders supported the idea that everything must be done to find a solution on Saturday."
Writing on Twitter in the early hours of Friday morning, EU President Donald Tusk ruled out the possibility of a special summit of eurozone leaders, like the one he called on Monday.
French President Francois Hollande also said on Friday that a deal between Greece and its eurozone creditors was needed before the cash-strapped country has to pay back the huge IMF debt bill.
"The door is still open for the Greek side to come with new proposals or accept what is on the table," Eurogroup chairman Jeroen Dijsselbloem told reporters.
The technical teams of Greece and its bailout supervisors will start writing a "staff level agreement" on Saturday, sources close to the talks said. If they reach an agreement the final document must be signed off by the political leadership.
German finance minister Wolfgang Schaeuble told reporters in Brussels that he is not very optimistic for a deal as talks weren’t making progress, and that “Greece has moved backwards” in its negotiating stance.
Prime Minister Tsipras urged fellow leaders to take responsibility and not leave Greece's fate in the hands of the International Monetary Fund, but they declined to step in, saying the talks must be run by finance ministers according to Reuters.
THE NEW STICKING POINTS
The Greek leftist leader said it was time for a "viable solution" that would lead Greece back to growth within the eurozone with social cohesion, but sticking points with creditors remain:
[1] Athens asks tax increase on businesses to 29% (from 26%). However, the creditors want a smaller increase in the corporate-income tax rate, from 26% to 28%.
[2] Concerning VAT the creditors want to tax restaurant meals and hotel accommodation at 23% rather than 13%, a lower rate introduced two years ago by the previous centre-left government led by Antonis Samaras.
[3] Lenders offer a three-month extension of the current bailout agreement while Athens opts for a six-month extension.
[4] But the biggest sticking point remains pension savings. The creditor's main goal is an immediate clampdown on early retirement by moving retirement age to 67 by 2022. Also creditors have been trying to get rid of a “solidarity grant” program that provides a top-up bonus to poorer pensioners, know by the Greek acronym EKAS, by the end of 2017 rather than by 2020.