(Adds Merkel, Belgian complaint)
* Tsipras to meet Merkel, Hollande, euro zone chiefs in Brussels
* Merkel expects no breakthrough from late-night meeting
* Greek deputy PM acknowledges looming liquidity crunch
* Bank deposit outflows spike as crisis sharpens
By Paul Taylor and Stephen Brown
BRUSSELS/BERLIN, March 19 (Reuters) - Euro zone leaders will tell Greece on Thursday that time and patience are running out for its leftist-led government to implement agreed reforms to avert a looming cash crunch that could force it out of the single currency.
Greece has been kept from bankruptcy by two international bailouts but now risks running out of money within weeks if it does not receive more funds. Greek banks reported the largest deposit withdrawals in a month, a sign savers are worried about the outlook for the country’s finances and institutions.
Prime Minister Alexis Tsipras has requested a meeting with the leaders of Germany, France and the main EU institutions on the sidelines of a European Union summit to press for Athens to receive short-term funds to keep itself afloat.
German Chancellor Angela Merkel doused any expectation of a deal at the late-night session, saying decisions were up to the Eurogroup of finance ministers of the 19-nation euro area.
“I want to say: don’t expect a solution, don’t expect a breakthrough. It’s not the right setting,” she told reporters on arrival at the summit. “Decisions are made in the Eurogroup and that’s how it will remain.”
French President Francois Hollande said the message to Tsipras would be that all sides must stick to their commitments.
“What shocks me is not that the Greek government is making an effort for the poor. What we ask of Greece is to make the richest people pay tax,” he said.
Tsipras did not mention his country’s acute funding problems in a brief comment on arrival, saying only: “The EU needs more political initiatives that respect both democracy and its treaties so that we leave behind the crisis and move to growth.”
Merkel earlier told the German parliament in Berlin the crisis could only be resolved if Greece stuck to reform commitments it made when it agreed with the euro zone on a four-month extension of its bailout programme.
A political meeting of a small group of leaders could not be used to circumvent the formal agreement Greece concluded on Feb. 20 with the Eurogroup, she told the lawmakers.
“There remains a very tough way ahead,” Merkel said. Greece must understand that international aid brought with it an obligation “to reform its budget and work towards one day no longer needing help”.
European Council President Donald Tusk, who will chair the summit, said he arranged a side-meeting with Tsipras to take the heat out of exchanges around the table. Belgian Prime Minister Charles Michel said he would complain about the private session among a few players. “It’s a bad method,” he said. Luxembourg’s Xavier Bettel said he would have liked to be present.
Two EU/International Monetary Fund bailouts totalling 240 billion euros have kept Greece from bankruptcy since 2010 but its economy has shrunk by 25 percent, partly due to austerity measures imposed by the lenders. It risks running out of cash without more aid or permission to issue more short-term debt.
European Commission President Jean-Claude Juncker has been trying to build bridges between Tsipras and Greece’s creditors. His exasperated tone suggested even Athens’ friends are losing patience with its belligerent rhetoric and procrastination.
EU sources said Greece had refused to provide any update on public finances or reform plans in a conference call of senior euro zone officials on Tuesday and had denied EU, IMF and European Central Bank experts access to government buildings in Athens, insisting all meetings take place in a hotel.
The discussions had not gone beyond procedural issues of who would be allowed to talk to whom, the sources said.
Asked whether the experts had been kicked out, an EU official said: “The talks in Athens were paused yesterday. This is normal procedure and can be helpful to take stock. There is willingness to talk but the Greeks must deliver.”
Deputy Prime Minister Yannis Dragasakis, in a television talk show early on Thursday, accused the creditors’ team of exceeding their authority.
“The technical teams came to collect facts, but they then requested things which went beyond their jurisdiction. For example, they wanted to review the government as a whole, every ministry’s programme and the reforms,” he told Alpha TV.
Dragasakis acknowledged Greece faced a liquidity problem and needed the cooperation of its European lenders to keep paying salaries, pensions and debt repayments: “We haven’t received any (bailout) tranches since August 2014 but we have been meeting all of our obligations,” he said. “This has its limits.”
The ECB agreed late on Wednesday to raise the limit on emergency lending to Greek banks by 400 million euros to 69.8 billion, banking sources said. Bankers said savers withdrew about 300 million euros in deposits on Wednesday.
“The uncertainty over the lack of progress in negotiations and the negative news flow has affected sentiment,” one banker told Reuters. “It’s not a huge amount. But the worry is whether this is the start of a trend that could get worse.”
European Parliament President Martin Schulz said Greece’s financial situation was “dangerous” and it needed 2-3 billion euros fast to avoid bankruptcy. “Time is short,” he told German radio. “So it would be good if Greece fulfils the obligations that it has agreed to — then further money will flow.”
Greece has asked to receive some 1.9 billion euros in ECB profits on Greek bond holdings, which finance ministers have linked to progress in implementing the programme. It also wants ECB permission to issue more short-term treasury bills, which only Greek banks are willing to buy.
Tsipras’ Syriza party won a general election in January on a platform of scrapping the bailouts, ending austerity and refusing to cooperate with the “troika” of institutions — EU, ECB and IMF — supervising its rescue programme.
The prime minister lambasted EU “technocrats” on Wednesday for demanding prior consultations on the cost of a “humanitarian bill” adopted by parliament to provide food stamps and free electricity to the poorest Greeks worst hit by austerity.
Athens has made no move in the month since the Brussels agreement to bring forward legislation to meet its commitments under the bailout agreement.
The chairman of the Eurogroup of finance ministers, Jeroen Dijsselbloem of the Netherlands, hinted this week that Greece might have to introduce capital controls restricting cash withdrawals, as Cyprus had done, if financial stress got worse. (Additional reporting by Mark John in Paris, Andreas Rinke and Elizabeth Pineau in Brussels, Karolina Tagaris, George Georgiopoulos and Angeliki Koutantou in Athens, Michelle Martin and Madeline Chambers in Berlin and Jan Strupczewski, Phil Blenkinsop, Alastair Macdonald and Renee Maltezou in Brussels; Writing by Paul Taylor; Editing by Anna Willard, Alastair Macdonald and Sophie Walker)