Greek debt talks collapse

Greece: The house of cards
Greece: The house of cards

Greece is one step closer to stumbling out of the eurozone after talks with its European creditors collapsed on Monday.

The Eurozone meeting finished early after Greek officials rejected a proposal from the rest of the bloc to extend current bailout program -- for the second time in just five days.

Greece was hoping to negotiate a new deal that would keep the country in the eurozone without having to maintain austerity reforms, and called the Eurogroup's offer "absurd."

"This program is part of the problem," Greece's finance minister Yanis Varoufakis said. "Our government was elected to challenge the philosophy of the program, not to get cosmetic changes."

The country's 240 billion euros bailout program is set to expire at the end of February. Without agreement, Greek banks could lose access to cash from the European Central Bank, and Greece could be ultimately forced out of the eurozone.

"In terms of timelines, we have this week and that is it," said Jeroen Dijsselbloem, the Eurogroup president.

He said there could be a special meeting of the group later this week -- but insisted the next step must come from Athens.

Related: Will China or Russia rescue Greece? Probably not

Greece's new government, led by anti-austerity party Syriza, wanted to tear up the existing program and replace it with six months of bridge financing to give it breathing space to negotiate a longer term solution.

But Europe is standing firm: Greece must honor the terms of the package, before it can talk about ways to ease the burden and boost growth.

German finance minister Wolfgang Schaeuble said he was skeptical about any agreement on Monday. Speaking to a German radio station ahead of the meeting, Schauble said Greece has been living beyond its means for a long time and cannot expect others to pay it more.

Schauble and other European leaders are trying to protect eurozone taxpayers, who have poured nearly 200 billion euros into Greek bailouts.

Several countries, such as Germany and Finland, would have to seek their parliaments' approval on any new bailout package.

The Greek government has a strong mandate from its voters -- dozens of support rallies took place across the country on Sunday.

But the economic reality is biting. GDP figures published Friday showed Greece's economy shrank in the fourth quarter of 2014 after growing for the first nine months of the year. The government's tax revenues fell almost one billion euros below target in January, as Greeks held off paying taxes before the election, hoping Syriza would scrap unpopular levies.

The euro was trading 0.5% down against the dollar after the talks collapsed.

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