(Repeats to additional subscribers with no changes)
* Athens makes 200 mln euro interest payment to IMF
* ECB raises weekly cash lifeline to Greek banks by 2 bln euros
* Eurogroup chief says there will be no deal with Greece on Monday
* Tsipras, Juncker discuss pension, labour reform in phone chat
By George Georgiopoulos and John O’Donnell
ATHENS/FRANKFURT, May 6 (Reuters) - European lenders on Wednesday dashed Greece’s hopes for a quick cash-for-reforms deal in the coming days, leaving Athens in an increasingly desperate financial position ahead of a major debt payment next week.
Talks between the two sides have dragged on for months without a breakthrough and EU officials say Greece’s leftist government has failed to produce enough concessions for a deal at next Monday’s meeting of euro zone finance ministers.
“Since the last Eurogroup quite a bit of progress has been made,” Eurogroup chief Jeroen Dijsselbloem said.
“Still, lots of issues have to be solved, have to be deepened more, with more details, so there will be no agreements on Monday. We have to be realistic.”
Prime Minister Alexis Tsipras’s government remains hopeful the Eurogroup meeting will acknowledge progress in the talks, possibly enabling the European Central Bank to let Greek banks buy more short-term government debt to ease a cash crunch. But there was no sign in Brussels or Frankfurt that any such easing of the squeeze is likely soon without concrete evidence of progress on reforms.[UD:L5N0XX2YD]
The ECB’s governing council extended emergency liquidity assistance to Greek banks by 2 billion euros at its weekly review on Wednesday, the biggest increase in recent weeks. The governors also debated tightening collateral conditions but were expected to hold off for another week.
Athens managed to scrape together funds to make a 200 million euro interest payment to the IMF on Wednesday, but faces a more daunting 750 million euro repayment on May 12.
With some municipalities, regional and public entities resisting an order to turn over cash reserves to the central bank, sources close to the government have expressed doubt about whether Athens can make both the IMF payment and pay wages and pensions later this month.
A government source said the money raised so far by the decree has fallen short of a target of 2.5 billion euros and that Athens is expected to continue resorting to other one-off measures such as holding off some payments to suppliers.
Greek officials had initially pinned their hopes on an interim agreement with lenders this week but with talks deadlocked on major issues like pension and labour reforms, they are now pushing for a more comprehensive deal later this month.
Monday’s Eurogroup meeting could serve as a “platform” for an eventual accord with lenders, Greek Finance Minister Yanis Varoufakis said after talks with his Italian counterpart.
Tsipras’ government has sought to shift blame onto the euro zone and IMF for a lack of agreement in the three-month-old negotiations, charging that each was setting different “red lines” on multiple issues from pension and labour reforms to the primary budget surplus, making a deal impossible.
The three institutions issued a rare joint statement rejecting that accusation and insisting they share the same objective of helping Greece achieve financial stability and growth.
German Finance Minister Wolfgang Schaeuble, one of Greece’s harshest critics among euro zone policymakers, also dismissed the accusation and said help for Greece had to “make sense”.
“Neither the troika, nor Europe, nor Germany can be blamed for Greece’s problems,” Schaeuble said, referring to the trio of European Commission, ECB and IMF informally dubbed the troika. “Greece lived beyond its means for many years.”
Tsipras discussed the two major stumbling blocks in a phone conversation with European Commission President Jean-Claude Juncker and they concurred on the role of a “modern” collective bargaining system, the leaders said in a statement.
It was not immediately clear if the conversation had helped bridge any differences. Restoring collective bargaining by sector - abolished under Greece’s five-year bailout programme - was one of Tsipras’ campaign promises.
The premier has made some concessions on restarting stalled privatisations, harmonising value-added tax and improving tax collection, but has refused to budge so far on pension cuts and labour law reform that would make it easier to lay off workers. Greece’s lenders also oppose his plans to raise the minimum wage.
Asked when a deal might be possible, a source at the negotiating table, speaking on condition of anonymity, told Reuters: “It depends on when Tsipras decides to tell his own people that he has to cross at least some of the red lines.”
Greece’s Deputy Prime Minister Yannis Dragasakis met ECB President Mario Draghi late on Tuesday to plead for Greek banks to be granted more emergency liquidity and allowed to buy more short-term treasury bills, easing the government’s cash crunch.
Greece sold 1.138 billion euros ($1.28 billion) of six-month T-bills on Wednesday, covering the entire amount it sought to raise in the first of two auctions this month.
Despite an increasingly dire financial position as bailout aid remains frozen, Athens has been able to find domestic buyers to plug any gaps resulting from foreign investors’ reluctance to roll over their own Greek T-bill holdings.
However, the ECB has capped the amount that Greek banks can buy because of concerns that their use of central bank funds amounts to indirect monetary financing of the government. (Additional reporting by Jan Strupczewski in Brussels, Gavin Jones in Rome, Deepa Babington and Lefteris Papadimas in Athens; Writing by Paul Taylor; Editing by Jeremy Gaunt and Susan Fenton)