Eurozone to discuss handling Greek defaut if no new proposals: sources

[LUXEMBOURG] Eurozone finance ministers will discuss how to hand a looming Greek default at a meeting on Monday unless Athens submits new proposals in the loans-for-reforms talks, EU officials said.

The ministers are scheduled to meet at 1300 GMT in Brussels to prepare for an emergency summit of eurozone leaders later that day as the debt-laden country is just days away from a default that could eventually push it out of the euro.

For the Eurogroup or the summit to consider a compromise, Greece would first need to submit new proposals on contentious issues such as pension reform and a widening of the tax base for Value Added Tax, the officials said.

So far the left-wing government of Alexis Tsipras, elected on a promise to end austerity, has refused to cross what it calls these "red lines". The creditors argue that without such reforms, Greece will not be able to be financially independent.

It is not at all certain that Athens will submit any new proposals considered credible enough for the creditors to discuss them on Monday.

"If there are no new proposals from Greece to discuss, the ministers are likely to instead talk about how to handle Greece's default," one eurozone official said.

Two other eurozone officials involved in the talks confirmed that that was the choice facing both ministers and leaders on Monday.

Athens must make a 1.6 billion euro debt repayment to the International Monetary Fund on June 30 or be declared in default.

With deposit outflows accelerating this weeks as talks have foundered, a missed payment could force Greece to impose capital controls to ration cash withdrawals and stem the flow of money out of the country or under mattresses.

REUTERS