Hopes of Greece debt deal rise after fresh proposals

French president Francois Hollande, left, and Greek prime minister Alexis Tsipras take part in a meeting of EU leaders in Brussels on June 22, 2015, aimed at preventing a default by Athens. Geert Vanden Wijngaert / AP PhotoShow less

Brussels // Greece’s creditors raised hopes for a bailout agreement this week to save Athens from default and a possible euro exit, despite warning no deal was likely at an emergency summit on Monday.

Eurozone leaders were cautiously optimistic about the eleventh-hour reform proposals from Greece as they met prime minister Alexis Tsipras in Brussels, even though finance ministers failed to make a breakthrough earlier in the day.

Athens stocks closed 9 per cent higher and Europe’s main markets all surged on hope of an end to the five-month standoff between the leftist Greek government and its EU-IMF creditors before a June 30 deadline.

Greek economy minister Giorgos Stathakis told the BBC earlier that creditors had broadly accepted the latest proposals, which included new taxes on businesses and the wealthy but not pension cuts.

The Greek proposals sent to Brussels overnight were a last-ditch bid to unlock the final €7.2 billion tranche of its international bailout, which creditors have refused to release without more austerity measures.

“It is a welcome step and a step in a positive direction, so I think it is also an opportunity to get that deal later this week”, said Jeroen Dijsselbloem, the head of the Eurogroup of eurozone finance ministers.

The Dutch hardliner said however that more work was needed and the Eurogroup would probably have to meet again later this week, before another summit of all 28 EU leaders on Thursday.

The EU president Donald Tusk said the proposals were the “first real proposals for many weeks” from the Greek government which has resisted calls by creditors for further cuts to pensions and changes to VAT.

But he warned of the consequences of failure, with Greece at risk of defaulting on a €1.5 billion (Dh6.25bn) IMF payment on June 30 if it fails to get a deal to extend its international bailout by the same day.

Missing the payment would set up a potentially chaotic “Grexit” from the eurozone, which Greece’s central bank has said could also see it cast out of the EU.

The International Monetary Fund is one of Greece’s three bailout monitors along with the European Commission and European Central Bank.

The EU’s involvement in Greece’s bailout, which was to provide €240bn in loans in exchange for drastic austerity measures and reforms, runs out at the end of this month, but IMF support is scheduled to continue to March 2016.

* Agence France-Presse