Merkel, Hollande & Tsipras to meet to push debt talks

German Chancellor Angela Merkel and French President Francois Hollande aim to outline solutions to the Greek debt crisis in talks with Greek Prime Minister Alexis Tsipras later on Thursday, Hollande said.

The new Greek government has held four months of talks with the EU and International Monetary Fund to try to reach a deal that could release up to 7.2 billion euros (USD 8.1 billion) in aid, but talks have stumbled over pension, labour reform, fiscal targets and hikes in value-added tax.

Tsipras, Merkel and Hollande will meet later on the sidelines of a summit between the European Union and six former Soviet republics in the Latvian capital Riga.

"We are not going to negotiate the Greek question in Riga but it's true that this allows us to prepare for the upcoming deadline, notably the Eurogroup meeting at the end of the month or at the start of June," Hollande told reporters on arrival at the summit.

"We want to find solutions with Mr. Tsipras which allow us to instil confidence and to free up the funds that had been foreseen. It will be a friendly discussion, but a discussion where we must sketch out solutions," he said.

However, he said France and Germany would not take decisions in place of Europe.

"We are working to facilitate matters and at the same time transmit a certain number of messages useful to Greece and useful to Europe," he said.

German Finance Minister Wolfgang Schaeuble has told Reuters the Greek government's optimism about clinching a cash-for-reforms deal with its lenders within days is not backed up by the negotiations, and he cannot rule out Greece becoming insolvent.

A Greek government official said Tsipras would brief Merkel and Hollande on talks between technical teams from Greece and its international lenders and would raise the issue of liquidity as well as ways to bridge a funding gap.

Athens does not expect Thursday's meeting to lead to a deal but it hopes for a timetable to speed up negotiations.

"There is momentum for a solution, a mid-term solution," the official, speaking on condition of anonymity, said.

The official said Greece had not requested an emergency Eurogroup, but still hoped for a meeting of euro zone finance ministers by the end of May.

Athens and its lenders remain at odds over VAT hikes. Lenders have been asking for 23 percent for the high category and 11 percent for the low, while Athens instead proposes three VAT categories of 22, 14 and 7 percent, the official said.

Following a German newspaper report that euro zone countries were considering extending the bailout over the summer, the official said neither Athens nor creditors had raised the issue. "If it is brought up as an issue, we could look into it," the official said.

Labour Minister Panos Skourletis has pointed to June 5 - when Greece's next loan payment to the IMF falls due - as the next crunch point for the cash-strapped country. But the official said Greece aimed for a deal by then.