“Hopes of an end to the impasse between Greece and its creditors have appeared to evaporate after a surprise intervention from the International Monetary Fund” writes The Guardian in article referring to the letter sent by IMF chief Christine Lagarde.

“Athens faces the spectre of default if its fails to honour maturing European Central Bank bonds and IMF loans in July” stresses the article.

In the letter Ms Lagarde “issued her most explicit warning yet: either foreign lenders agree to restructure Greece’s runaway debt or the Washington-based organisation will pull out of rescue plans altogether”, the article mentions.

“For us to support Greece with a new IMF arrangement, it is essential that the financing and debt relief from Greece’s European partners are based on fiscal targets that are realistic because they are supported by credible measures to reachthem,” she wrote, lamenting the lack of structural reforms underlying Athens’ abortive adjustment programme so far, says The Guardian.

The newspaper mentions that “IMF managing director’s intervention came after the surprise decision of the leftist-led government in Athens to put unpopular pension and tax changes to a vote on Sunday.”

Mujtaba Rahman, head of European analysis at risk consultancy Eurasia Group, said that “While creditors fight this out, the political and social situation in Athens will deteriorate,” adding that “Time is running out for creditors to come to an agreement.”