German Chancellor Angela Merkel said Friday there was still a lot of work needed to reach agreement with Greece on its debt bailout, as tortuous talks drag on amid fears Athens could run out of money.

The government of Greek leftist Prime Minister Alexis Tsipras is locked in talks to obtain fresh funding with international creditors who are demanding more tough austerity measures in return.

Tsipras met Merkel and French President Francois Hollande late Thursday on the sidelines of the EU-Eastern Partnership summit in the Latvian capital Riga but their discussions produced no breakthrough.

"It was a very friendly and constructive exchange," Merkel said as she went into the summit Friday.

"But it is clear, the work with the three institutions has to go on. There is still a lot to do," she said, referring to the European Union, European Central Bank and the International Monetary Fund who have bailed out Greece twice to the tune of 240 billion euros.

Merkel said she and Hollande had offered Tsipras their good offices if he needed help during the talks but it was up to Athens to reach an accord with the three creditors.

"The conclusion has to be found with the three institutions and it has to be worked very, very intensively," she added.

Tsipras said he was "very optimistic" as he went into the summit Friday and declined further comment.

An aide to Hollande said earlier that the talks late Thursday had been "friendly and constructive (and had) ... focused on the desire to reach an agreement on the current programme."

A Greek government source said separately that Merkel and Hollande "understood the need for a long-term deal."

The immediate focus is what reforms the radical left Tsipras can accept in return for the release of a final 7.2 billion euros ($8.2 billion) in bailout funds Athens needs to avoid defaulting on its debt and possibly crashing out of the eurozone.

The delay in reaching an agreement has led to concerns Athens is running critically short of cash and may soon end up defaulting, which could set off a messy exit from the euro.
Source: AFP