Tsipras warns of referendum if talks on bailout deal fail

Greece's leftwing prime minister has said he expects to reach a deal with international creditors by May 9 but warned that if a bailout agreement cannot be reached he would resort to holding a referendum.

In a late-night television interview, Alexis Tsipras ruled out defaulting on a €780m loan repayment to the International Monetary Fund due on May 12 even though Athens is struggling this week to pay pensions and subsidies, which he said must take priority.

"In spite of the difficulties, there are great possibilities for winning this negotiation . . . I'm confident we'll achieve an interim agreement in the next week," the premier told Star television, a private channel.

An interim agreement would allow Greece to unlock €7.2bn in bailout aid and open the way for talks to begin in June with the EU and IMF on a third bailout package.

Earlier on Monday Mr Tsipras put Euclid Tsakalotos, the deputy foreign minister for economic affairs and a close associate, in charge of the bailout negotiations, which have made little progress since his radical Syriza party won a general election in January on an anti-austerity platform.

Mr Tsakalotos has taken the lead role in the talks from Yanis Varoufakis, the outspoken finance minister who was sidelined after an acrimonious meeting of eurozone finance ministers in Riga last week. Mr Varoufakis retained his cabinet post and will serve on an economic policy making committee.

The prime minister ruled out calling a snap election if international lenders seek further austerity measures, but would instead go directly to the Greek people. "If the solution offered goes beyond our mandate, it will have to be endorsed by the people," he said.

In a sign that the government is preparing a compromise, the finance ministry will present a package of structural reforms to parliament this week - the first since Mr Varoufakis took over as minister - that would accelerate a deal with creditors.

The measures would include fiscal management reforms, boosting the independence of the revenue collection authority and launching auctions for television licences which were agreed with the previous centre-right government but not implemented.

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