Greece debt deal still possible, says Angela Merkel

 Mrs Merkel  said she thought Greece could reach an agreement with its creditors - the EU, the International Monetary Fund and the European Central Bank.

 She also told the Bundestag that Germany was working hard to keep Greece in the euro, but said Athens had to follow through on reform commitments.

"I'm still convinced - where there's a will, there's a way," she said.

"If those in charge in Greece can muster the will, an agreement with the three institutions is still possible."

'Commitments'

Mrs Merkel added: "In February there was an agreement - the Greek government pledged to carry out structural reforms, and that must be done."

In February, she said, Greece had also "agreed to fulfil its commitments to bondholders".

She was speaking ahead of a meeting of eurozone finance ministers in Luxembourg on Thursday.

Greece has less than two weeks left to reach a debt deal or face defaulting on an existing €1.6bn (£1.1bn) loan repayment due to the IMF.

The country has already rolled a €300m payment into those due on 30 June.

'Compromising mood'

Greece's chief negotiator and junior foreign minister Euclid Tsakalotos told the BBC Radio 4 Today programme that any deal had to be one that was economically feasible.

"A couple of weeks ago, we presented our ideas, which we thought was the common ground of the negotiations of the last two or three months," he said.

"We think that we have been in a compromising mood, we've been suggesting ideas, whereas the institutions presented a paper that was very close to their original bid.

"So what we are saying is that further compromises can be made, we can search for common ground, but the end product of what we agree on reforms, on the financing for the future, on the investment programme must be economically feasible."

He also said the country must be able to keep its fiscal promises.

Mr Tsakalotos added: "So if we agree for a fiscal surplus of 1% this year and 2% next year, then I have to be able to tell [the Greek prime minister] that we can meet that, not that we're going to have more recession that will make those targets unfeasible, and then the Europeans will come back and say: 'You can't talk to the Greeks because they never deliver their promises'."

Earlier, Mr Tsakalotos told Reuters news agency that without help, Greece would be unable to meet its obligations to the IMF on 30 June.

"At the moment, we haven't got the money," he said.

Reform demands

Greek Finance Minister Yanis Varoufakis said the country had a "political and moral duty" to reach an agreement with creditors over its debt crisis.

But he said Thursday's meeting of eurozone finance ministers was unlikely to bring an immediate solution.

In return for more funding, creditors want further reforms from Greece.

But the ruling Syriza party is resisting those demands and, with talks deadlocked, fears are growing that Greece may default on its debts.

The European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) could extend fresh finance, but are insisting on reform and further austerity measures.

Mr Varoufakis, when asked if there could be an agreement at the meeting of eurozone finance ministers in Luxembourg on Thursday, said: "I do not believe so."

"Tomorrow we will set the scene for what we consider to be our political and moral duty, and that is to reach an agreement very, very quickly with our partners and the institutions," he said.

On Wednesday, Greece's central bank warned that the country could be on a "painful course" to default and exit from both the eurozone and the EU.

Greece has seen regular protests against austerity measures

The Bank of Greece also warned that the country's economic slowdown would accelerate without a deal.

"Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and, most likely, from the European Union," it said in a report.

The bank added that about €30bn was withdrawn from Greek bank deposits between October and April.

Greek Prime Minister Alexis Tsipras is set to travel to the St Petersburg International Economic Forum in Russia on Thursday and is scheduled to hold talks with President Vladimir Putin on Friday.