Greek PM vows 'credible' reforms as deadline looms

[BRUSSELS] Greek Prime Minister Alexis Tsipras vowed on Wednesday to present "credible" reform plans before a deadline set by exasperated European leaders as Athens formally sought a new bailout to avoid crashing out of the euro.

But in a sign of the deep crisis gripping his country, the finance ministry in Athens said Greek banks would remain closed until Monday.

Leftist leader Tsipras was greeted by a mix of boos and cheers as he addressed the European Parliament in Strasbourg, France, on Wednesday.

He defended his decision to hold an anti-austerity referendum last Sunday that dismayed Europe, appealed for unity but also promised his blueprint for a deal would have substance.

"The Greek government will tomorrow file new concrete proposals, credible reforms, for a fair and viable solution," Mr Tsipras told lawmakers during a heated debate.

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

They ordered Athens to file a complete reform plan by midnight (2200 GMT) on Thursday, with European President Donald Tusk saying the "final deadline" for a deal would be a summit of all 28 EU leaders on Sunday.

The Greek government promised on Wednesday it would start pension and tax reforms next week, as demanded by creditors, in return for a three-year loan to drag its financial system back from the brink of collapse.

French Prime Minister Manuel Valls said the Greek proposals were a step in the right direction and the request was "balanced, positive".

He reiterated France's stance 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 "Grexit" - departure of Greece from 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," said Mr Tusk, warning that failure "may lead to the bankruptcy of Greece" and cause geopolitical problems for Europe.

Leading financial figures cautioned, though, that restructuring Greece's debt mountain had to be a part of a deal.

"Debt restructuring is needed in the case of Greece for it have debt sustainability," International Monetary Fund (IMF) chief Christine Lagarde told a conference in Washington.

The IMF is one of Greece's creditors, along with European Commission and European Central Bank (ECB).

US Treasury Jacob Lew also weighed in, saying creditors needed to give Greece a path for debt restructure and growth.

"Greece's debt is not sustainable," he warned.

The ECB has been providing emergency liquidity to keep Greek banks from collapsing, and on Wednesday decided to leave the limit on its stop-gap credit facility to Greece unchanged at 89 billion euros (S$133 billion), a banking source said.

But further support will depend on political developments in Brussels and Athens.

Greece's banks, closed since June 28, will remain shuttered until next Monday, the finance ministry said in Athens.

"The bank holiday is extended to July 13," the finance ministry said in a statement.

A ministry source also told AFP that withdrawals by Greeks would remain limited to 60 euros to avert a cash shortage.

SHORTAGE, TOURISM FEARS

The cash emergency, which has led to long queues at ATMs, has triggered fears for essential supplies in Greece as more and more businesses have been unable to pay bills.

Last-minute tourist reservations have plunged 30 percent, the Greek Tourism Confederation said.

The head of France's central bank, Christian Noyer, who told French radio he feared Greece could descend into "chaos" without a deal this week.

World stocks were mixed, with Asian and US shares sinking but European stocks edging higher on hopes of a deal.

The euro advanced to US$1.1041 from a five-week low of US$1.0916 in New York trade on Tuesday.

In his formal letter to the European Stability Mechanism (ESM) - the lender of last resort set up during the eurozone debt crisis - Mr Tsakalotos said Greece would "immediately implement a set of measures as early as the beginning of next week".

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

The price of those loans was five years of austerity measures, and in Sunday's Greek referendum voters overwhelmingly rejected more belt-tightening required by the creditors.

AFP

Read more on the Greek crisis here