Greek Prime Minister Alexis Tsipras said today that the country will "patiently wait for [its lenders to] adhere to realism".
In an irate statement issued following last night's crunch talks, which collapsed after just 45 minutes, Tsipras said "one can only suspect political motives behind the institutions' insistence that new cuts be made to pensions".
Greece's talks with its creditors have reached sticking points after its lenders, the International Monetary Fund and the European Commission, insisted on cuts to pensions, VAT and a primary budget surplus target of one per cent this year, up from Greece's desired target of 0.75 per cent.
Greek markets were down 5.29 per cent at lunchtime, while European markets were also hit, with the FTSE 100 down one per cent, Germany's Dax down 1.8 per cent and France's Cac down 1.6 per cent.
Last night, Germany’s economy minister and vice-chancellor Sigmar Gabriel warned Greece that its exit from the euro is becoming increasingly likely.
According to a European Commission spokesperson, progress was made, but significant gaps remain between the two parties’ positions.
Last night IMF chief economist Olivier Blanchard published a blog post laying out areas of conflict between the two sides. As has been widely reported, sticking points include primary budget surplus targets, VAT and pension reforms.
He acknowledged the need for concessions on both sides.
"On the one hand, the Greek government has to offer truly credible measures to reach the lower target budget surplus," he said.
"On the other hand, the European creditors would have to agree to significant additional financing, and to debt relief sufficient to maintain debt sustainability."
Blanchard's comments come after the IMF's delegation walked out of negotiations in Brussels after weeks of disagreements, saying the ball was "very much in Greece's court".
Naeem Aslam, chief market trader at Ava Trade, said Greek negotiators must make the next move.
"The default scenario is going to catch more fuel during this week unless the creditors do offer debt relief as the part of the package and a significant changes are made by the Greek sides so that the creditors feel comfortable with their new offer.
"Unless both sides agree on a deal, capital control will be the ultimate step by the Greek government."
Greece urgently needs to unlock €7.2bn of funding from its lenders in order to make loan repayments, including a €1.5bn payment due to the IMF at the end of this month. European finance ministers are due to meet on Thursday to thrash out a deal, although hopes are not high.