DEFAULT by debt-wracked Greece loomed dangerously closer after last-ditch talks between Athens and its EU-IMF creditors collapsed late Sunday, bringing the threat of a Greek exit from the euro closer than ever.

    The crunch negotiations failed in their second day, heaping worry that the cash-starved Greek Government was heading irreversibly into a financial abyss with a huge IMF debt payment due at the end of the month.

    “They came with their hands in their pockets,” a furious EU source close to the negotiations said, while Greek officials said the failure was the fault of the International Monetary Fund (IMF), the country’s most hardline creditor.

    “The demands of the creditors are irrational, the discussions lasted 45 minutes,” an irate Greek government source said.

    However analysts said it was unlikely the euro would take a plunge as investors were in a “wait-and-see mood.”

    All sides had agreed that the talks were the last chance for Athens to unlock vital bailout cash in return for tough reforms that Greece’s 40-year-old Prime Minister Alexis Tsipras still doggedly refuses.

    The IMF’s position was “intransigent and tough” because it was insisting on further pension cuts and a rise in value-added tax on basic goods, like electricity, the Athens source added.

    But in a rare statement on their position in the talks, the IMF took a conciliatory approach, writing in an official blog that a deal would require “difficult decisions by all sides” — including Greece’s European partners.

    Nevertheless chief economist Olivier Blanchard insisted that Greece must tackle its bloated pension system, which he said accounted for a whopping 16 percent of the country’s economy.

    Greece is shattered economically after six years of crisis and despite two rescue programs since 2010, worth 240 billion euros (US$270 billion), mostly in loans owed to its European partners, led by Germany and France.

    The small Mediterranean nation is now buried under a mountain of debt equivalent to 180 percent of GDP, or almost twice the country’s annual economic output.

    According to an EU source, savings from the reform measures put on the table by anti-austerity Greece fell short by two billion euros.

    The Greek proposal “remains incomplete,” the EU source said, and was not enough to unlock the 7.2 billion euros still remaining in Greece’s international bailout, which expires June 30.

    Also at the end of the month, Greece faces a huge 1.6 billion euro payment to the IMF with another 6.7 billion euros due to the European Central Bank in July and August, which Greek officials have said the government cannot afford.(SD-Agencies)