By Lefteris Papadimas ATHENS (Reuters) - Greece is locked in tough negotiations with its foreign lenders, with "nerves stretched" on both sides, the finance minister warned on Tuesday, raising the temperature as Athens tries to exit an unpopular bailout program.
Inspectors from the European Union and the International Monetary Fund were due to return to Greece after the results of the European bank stress tests last month, but have yet to arrive, leaving just three weeks to reach a deal before a targeted Dec. 8 deadline set by Athens.
"We are in a tough phase," Finance Minister Gikas Hardouvelis said during a meeting with Greek President Karolos Papoulias. "In this interim period, nerves are stretched on all sides. It's not just us, it's also on the side of the lenders."
The two sides are mainly at odds over the projected size of a budget gap for 2015, a senior Greek government official told Reuters. The lenders argue the government's plan to let Greeks repay arrears to the state in 100 instalments would widen this gap, two government officials said.
Athens agreed to remove a contentious real estate tax from the plan, but lenders are pressing for more changes, they said.
The lenders estimate that the 2015 fiscal gap will hit about 2.5 billion euros ($3.1 billion) unless the plan is changed, one of the government officials said. Athens, which is due to present its final budget in parliament this week, predicts a fiscal gap of less than 1 billion euros next year.
"I believe that a solution will be found," said the senior government official. "Time will be tight if (the EU/IMF inspectors) don't return to Athens by next week."
Prime Minister Antonis Samaras wants to exit the current EU/IMF bailout one year ahead of schedule to appease austerity-hit Greeks, who have felt the pain of a deep recession. Data showed last week that Greece emerged from the slump this year.
But the coalition government is walking a tightrope due to a presidential vote in February, which could trigger snap elections and bring the anti-bailout Syriza party to power.
Deputy Prime Minister Evangelos Venizelos maintained a defiant tone, saying Athens would not change its budget plans, despite the scepticism from EU/IMF lenders.
"We are not going to back down on any issue," Venizelos said, adding Athens would pursue reforms without austerity.
(Writing by Renee Maltezou; Editing by Deepa Babington and Tom Heneghan)