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Hope for Greece as eurozone's leaders consider new plan

By Leo Cendrowicz

Published 08/07/2015

Greek Communist Party supporters listen to speeches during a rally in Syntagma Square near the Parliament on July 2, 2015 in Athens, Greece. As people continue to queue outside banks Greek finance minister Yanis Varoufakis said that he will quit if voters don't back him up in Sunday's referendum. (Photo by Christopher Furlong/Getty Images)
Greek Communist Party supporters listen to speeches during a rally in Syntagma Square near the Parliament on July 2, 2015 in Athens, Greece. As people continue to queue outside banks Greek finance minister Yanis Varoufakis said that he will quit if voters don't back him up in Sunday's referendum. (Photo by Christopher Furlong/Getty Images)
ATHENS, GREECE - JUNE 29: Demonstrators during a rally in Athens, Greece, 29 June 2015. Greek voters will decide in a referendum next Sunday on whether their government should accept an economic reform package put forth by Greece's creditor. Greece has imposed capital controls with the banks being closed untill the referendum. (Photo by Milos Bicanski/Getty Images)
Thousands of pro-euro demonstrators gather during a rally outside the Greek parliament in Athens yesterday to show support for the country’s future in the eurozone
Thousands of pro-euro demonstrators gather during a rally outside the Greek parliament in Athens yesterday to show support for the country’s future in the eurozone

Greece's chances of staying in the euro appeared to improve last night after eurozone leaders agreed in Brussels to consider Prime Minister Alexis Tsipras's request for a temporary refinancing programme.

The leaders will study proposals to give Greece emergency funding to prevent another default, provided that Athens can pass some credible economic reforms to help make its public finances sustainable. The potential breakthrough came two days after Greek voters rejected the terms of a eurozone bailout.

A further eurozone summit has been scheduled for Sunday, when the leaders could confirm the deal to keep the Greek economy afloat, provided it accepts credible reforms. However, Donald Tusk, the President of the European Council, warned that Sunday was the last chance for Greece to stay in the euro. "The stark reality is that we only have five days to find the ultimate agreement. But tonight I have to say it loud and clear - the final deadline ends this week," he said, as he raised the spectre of Grexit.

With Greece's banks closed for more than a week now, Mr Tspiras arrived at the summit with his country's membership of the eurozone in grave doubt. But the summit hammered out a tentative timetable for reforms and aid that could keep Greece in the single currency.

Under the timetable, Mr Tsipras will request a medium-term assistance programme from the European Stability Mechanism (ESM) rescue fund. The request is for a short-term loan to meet a €3.5bn bond redemption to the European Central Bank (ECB), due on July 20, and to clear arrears of €1.5bn with the International Monetary Fund (IMF).

Eurozone finance ministers will consider that request. Greece's main creditors - the European Commission, the IMF and the ECB - will also examine the plans.

Mr Tsipras will have to propose his plan today. Greek officials say some initial proposals could be sent through the parliament in Athens before the weekend summit. The measures would also need the approval of Germany.

The aim of the bridging loan is not only to stop the Greek economy collapsing, but also to give all sides time to think about a longer-term bailout proposal. The new proposal would be similar to that suggested by Mr Tsipras in a letter sent last week to the Commission, IMF and ECB. It would include a demand for Greece's €323bn debt to be cut by up to 30%, with a 20-year grace period.

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