Greece Eyes Midnight Deadline For Badly Needed New Bailout Plan

The long-running debt crisis has reached fever pitch this week after Greeks decisively rejected the latest bailout offer from European Union leaders at a referendum on Sunday. 

Published: 09th July 2015 10:47 AM  |   Last Updated: 09th July 2015 10:47 AM   |  A+A-

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Members of the European Parliament hold placards which reads "No - Freedom to Greece" ahead of the speech of Greek Prime Minister Alexis Tsipras at the European Parliament in Strasbourg, France, July 8, 2015. REUTERS/Vincent Kessler

Brussels: Greece on Thursday was hurtling toward a midnight deadline to submit new bailout plans to unlock billions of euros of fresh aid desperately needed to keep its struggling economy afloat and stop it crashing out of the euro.

Greek Prime Minister Alexis Tsipras vowed on Wednesday to present "credible" plans to seal more emergency loans from his exasperated European creditors ahead of a summit of all 28 EU leaders on the debt crisis on Sunday.

"The Greek government will tomorrow file new concrete proposals, credible reforms, for a fair and viable solution," Tsipras told lawmakers at the the European Parliament in Strasbourg, France.

The long-running debt crisis has reached fever pitch this week after Greeks decisively rejected the latest bailout offer from European Union leaders at a referendum on Sunday. 

But the euphoria felt by some Greeks after the vote has quickly faded as capital controls have extended into their second week, limiting ATM withdrawals, and fears have grown over dwindling supplies of food and medicine. 

Eurozone leaders lost patience at a crisis meeting in Brussels on Tuesday after Tsipras and his new finance minister, Euclid Tsakalotos, turned up without any concrete plans for ending the standoff.

But they struck a more upbeat tone on Wednesday after Athens promised to start pension and tax reforms demanded by creditors in return for a three-year loan to drag its financial system back from the brink of collapse.

In a formal letter to the European Stability Mechanism (ESM) -- the EU's lender of last resort -- Tsakalotos said Greece would "immediately implement a set of measures as early as the beginning of next week".

French Prime Minister Manuel Valls said the proposals were a step in the right direction and reiterated that keeping Greece in the eurozone was a "geopolitical issue of the highest importance".

Spanish Prime Minister Mariano Rajoy also said of Greece: "The tune has changed, it's not what we were hearing until now and that's positive."

But Tusk reiterated Sunday's summit was the final chance for a deal to avoid a so-called "Grexit" -- Greece crashing out of the 19-nation single European currency -- which would have global repercussions.

"This is really and truly the final wake-up call for Greece and for us, our last chance," he said, warning that failure "may lead to the bankruptcy of Greece" and cause geopolitical problems for Europe.

Other leading figures from the world of global finance also cautioned Wednesday that restructuring Greece's debt mountain had to be a part of a deal.

"Greece is in a situation of acute crisis which needs to be addressed," International Monetary Fund (IMF) chief Christine Lagarde told a conference in Washington.

"We believe (debt restructuring) is needed in the case of Greece for it to have debt sustainability."

The IMF -- which along with the EU and ECB make up Greece's principal creditors -- last week said Brussels would need to stump up another 36 billion euros ($40 billion) to keep the country afloat.

Greece's banks were forced to shut their doors and limit withdrawals on June 28 after Athens's huge EU bailout expired and the country became the first developed nation to default on a payment to the IMF.

On Wednesday, the finance ministry extended "the bank holiday" until the following Monday, while a ministry source said withdrawals would stay capped at 60 euros to avert a cash shortage.

Also on Wednesday, the ECB decided to leave the limit on its stop-gap credit facility that has been providing emergency liquidity to Greek banks unchanged at 89 billion euros, a banking source said.

The fallout from the debt crisis has hit Greece's vital tourist industry, which has seen last-minute reservations plunge 30 percent, the Greek Tourism Confederation said.

Experts have also warned the crisis could impede Greece's ability to cope with the tens of thousands of migrants flooding across its borders looking for a better life in Europe.

Greece has had two international bailouts worth 240 billion euros since 2010, the last of which expired on June 30.

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