With time quickly running out to unlock bailout funds needed to repay its debts, the Greek government has said that differences between the EU and IMF were blocking an agreement.

"Serious divergences and contradictions between the creditors, the European Union and the International Monetary Fund are hindering the negotiations", the Greek government said in a statement.

Given "this inability of the institutions to reach an agreement... there can be no compromise" which is needed to reach a deal with Greece, said Athens.

It said the current situation is "the exclusive responsibility" of the EU and IMF.

Greek Finance Minister Yanis Varoufakis said earlier that he does not expect to reach a deal with his counterparts at a May 11 meeting in Brussels to unlock €7.2 billion from Greece's current bailout programme.

There are growing concerns about the Greek government's ability to repay the almost €1bn it owes to the IMF in two payments this week and next.

The Greek government statement said that the IMF insists on tough reforms to the country's retirement and labour market, but was willing to allow a reduction in the primary budget surplus.

A reduction in the primary budget surplus, the budget balance before foreign debt payments, would give the Greek government more room for social spending but means less money would go to debt repayments.

The Greek government statement noted a reduction in the primary budget surplus also implied "the reduction of the country's public debt so that it remains sustainable."

The IMF can only support countries whose debt is judged as sustainable, so if it is judged as unable to make payments and continue functioning then the debt should be cut.

Greece's debt, already the highest in the euro zone, is expected to soar to 180.2% of annual economic output this year, before falling slightly to 173.5% in 2016, according to EU figures released Tuesday.

However, the European Commission is opposed to any restructuring of Greece's debt, the Greek government statement said. Most of Greece's debt is now owed to EU countries and the EU bailout fund.

But the Greek government said that the Commission is more "flexible on the tough reforms" to the retirement system and labour market.

"Taking into account these major differences, the Greek government has decided not to advance legislation on the reforms before an agreement" with the EU and IMF, said the government statement.

Greece today stepped up diplomacy with euro zone partners to try to avert a potentially catastrophic funding crunch as a result of its big debt repayment to the IMF as cash reserves dry up. 

Ministers travelled to Frankfurt, Brussels and Paris to plead for a loosening of the financial stranglehold on Athens.

These meetings came after Prime Minister Alexis Tsipras spoke by telephone to German Chancellor Angela Merkel, Europe's pre-eminent leader. 

"They discussed the course of the negotiations in Brussels and exchanged views on the issues of Greece's deal with its lenders," a Greek government official said of the call last night, without elaborating. 

"Italy's government considers it short-sighted and dangerous to underestimate the Greek crisis," Gentiloni said, adding that the idea of a Greek exit from the euro zone could not be taken lightly.

In a goodwill gesture, a senior privatisation official said Athens was ready to finalise a €1.2 billion deal with German operator Fraport to run regional airports and to reopen bidding for a majority stake in the port of Piraeus. 

European Economics Commissioner Pierre Moscovici said the aim was for euro zone finance ministers to be able to officially register "strong progress" in the negotiations when they meet next Monday but did not suggest a deal was possible by then. 

The political uncertainty prompted the Commission to cut its forecast for 2015 Greek economic growth to 0.5% from 2.5% just three months ago. It also cut its estimate for Greece's primary budget surplus before debt service. 

"The fact that negotiations are still going on without having been concluded after more than three and a half months, all that has an impact on expectations for growth and public finances in Greece," Moscovici told a news conference. 
              
Meanwhile, Greek Deputy Prime Minister Yannis Dragasakis is due to meet ECB chief Mario Draghi in Frankfurt to urge the bank to increase a liquidity lifeline for Greek banks and permit them to buy more short-term treasury bills, easing the government's immediate funding crunch. 

ECB policymakers will hold their weekly review of emergency lending assistance (ELA) to Greek banks tomorrow amid pressure from hardliners led by Germany's Bundesbank to tighten the collateral terms, ECB sources said. 

Pointing to recent credit rating downgrades of Greece and its banks, the hawks want the ECB to increase the "haircut" on Greek securities that banks present as collateral for funding. 

But an ECB source said he did not expect the council to make a dramatic change that would put Greek banks in immediate difficulty while negotiations are continuing.

Mr Varoufakis, sidelined by Tsipras from the negotiations after alienating his euro zone colleagues, met his French counterpart, Michel Sapin, in Paris and was due to see Moscovici later in Brussels. 

Moscovici stressed the Commission's goal was to keep Greece in the euro zone and avert what he called an "accident". 

While Germany and its allies have pointed to calm in bond markets to suggest that a Greek default or exit from the euro zone would not cause a wider financial meltdown, as it might have done in 2012, other EU countries are more concerned. 

Italian Foreign Minister Paolo Gentiloni warned against belittling the risks of a possible "Grexit". 

"Italy's government considers it short-sighted and dangerous to underestimate the Greek crisis," Gentiloni said, adding that the idea of a Greek exit from the euro zone could not be taken lightly.