The IMF was "insisting on additional salary cuts" in the public sector but Finance Minister Yannis Stournaras was refusing to give way, the source told AFP.

 

Leaders from the eurozone and officials from the International Monetary Fund are insisting that the Greek government come up with convincing measures and action to implement them.

 

The EU and IMF are funding vital bailout help for Greece. But the country has fallen far behind in enacting structural reforms, and the IMF says the new package must include further pay cuts in the state sector.

 

Conclusion of negotiations on extra austerity would unblock a 31.5-billion-euro instalment of rescue funding which the country needs to stay afloat.

 

On Wednesday, marathon negotiations managed to narrow down the measures needed to reach agreement to between two billion and three billion euros ($2.6-3.9 billion).

 

According to another finance ministry source, the EU, IMF and European Central Bank, the so-called troika, had accepted Greek proposed measures "worth 8.5 to 9.5 billion" out of an 11.5-billion-euro ($15 billion) austerity package which Greece had agreed to push through.

 

The official added however that it was paramount that coalition partners from the Socialist Pasok party and left-of-centre Dimar accept proposals tabled by Finance Minister Yannis Stournaras, who is still in talks with the lenders.

 

"While Stournaras and his team are fighting for the rest of the package, we don't see a helping hand, only criticism and grumbling," the official said.

 

Prime Minister Antonis Samaras has called another meeting with the coalition partners this morning.

 

According to local media reports, the coalition partners disagree on a proposal to raise the Greek retirement age to 67 from the current 65, a move that would provide sustainable savings to the satisfaction of the troika.

 

New salary cuts in the public sector would be difficult to accept as civil servants have already sustained reductions of between 25 and 40 per cent over the last two years.

 

On Tuesday, Stournaras said the negotiations were "difficult" but with about two thirds of the austerity programme already finalised, Greece was on the right path and close to sealing a deal with its international lenders.

 

A general strike has been called against the planned cuts on 26 September.