Greece’s new leftist Prime Minister, Alexis Tsipras, said yesterday he would not accept an extension to Greece’s current bailout, setting up another clash with EU leaders – who want him to do just that – at a summit on Thursday.

Tsipras has already irked the EU by pledged his government would heal the “wounds” of austerity, sticking to campaign pledges of giving free food and electricity to those who had suffered, and reinstating civil servants who had been fired as part of bailout austerity conditions.

In his first major speech to Parliament as premier, the Prime Minister said he was still optimistic he could reach agreement with Greece’s EU partners on a new debt pact and transitional agreement.

“The bailout failed,” he said. “The new government is not justified in asking for an extension ... because it cannot ask for an extension of mistakes.”

Tsipras’s speech will have been closely watched by European Union leaders who to date have shown scant willingness to meet Tsipras’s demands, fearing a wholesale backtracking on the fiscal and economic reforms international lenders have demanded in exchange for some €240 billion worth of assistance.

Greek Finance Minister Yanis Varoufakis (left) speaking with Greek Minister of Culture, Education and Religious Affairs Aristidis Baltas in Parliament, Athens, yesterday. Photo: Reuters

Greeks have been severely hit by the austerity imposed on them by the “troika” of European Central Bank, International Monetary Fund and European Commission lenders.

The country is only just coming out of years of economic depression, but roughly one in four Greeks are unemployed.

“The first priority of this government ... is tackling the big wounds of the bailout, tackling the humanitarian crisis just as we promised to do before the elections,” Tsipras said.

He said the main battle would be against corruption and vowed to tackle Greece’s long-time struggle with tax evasion. He also announced a series of cuts to politicians’ benefits such as banning ministerial cars and selling one of the prime minister’s aircraft.

The new government cannot ask for an extension of mistakes

Tsipras said he would also end property tax and replace it with a tax on high-value property.

Over the past week, Greek officials have laid out what they see as a transitional plan to keep finances flowing over the next few months while they renegotiate their debt agreement.

Instead of the next tranche of bailout funds – €7.2 billion , due pending a suspended review – Greece’s new government wants the right to issue more short-term debt beyond a current €15 billion threshold.

It also wants €1.9 billion in profits from Greek bonds held by the European Central Bank and other eurozone authorities, something that was agreed previously.

With that as a bridge, Greek officials would then try to renegotiate payment of Greek sovereign bond debt, perhaps by extending payments, only paying interest and getting some respite on the budget surplus it is expected to run.

One government official suggested that not everything had to happen at once.

“The pace of the implementation of our promises is ‘within four years’,” the official said.

Meanwhile, Greek Finance Minister Yanis Varoufakis said yesterday that, if Greece is forced out of the eurozone, other countries will inevitably follow and the currency bloc will collapse.

In an interview with Italian state television network Rai, Varoufakis said Greece’s debt problems must be solved as part of a rejection of austerity policies for the eurozone as a whole.

“The euro is fragile, it’s like building a castle of cards, if you take out the Greek card the others will collapse,” Varoufakis said.