Greek debt crisis: Tsipras seeks to thrash out deal

Greece's Prime Minister Alexis Tsipras smiles as he arrives at Maximos Mansion in Athens on Tuesday, June 23, 2015 Image copyright AP
Image caption New proposals from Greece has raised hopes Mr Tsipras can strike a deal

The Greek Prime Minister, Alexis Tsipras, is holding fresh talks with his country's creditors as he tries to secure an urgent deal on Athens' debt.

Greece must repay €1.6bn (£1.1bn) to the International Monetary Fund (IMF) by the end of the month, or face default and possible exit from the EU.

European Union leaders have broadly welcomed Greece's latest proposals for reforms - but obstacles remain.

Eurozone finance ministers are due to finalise a deal on Wednesday evening.

The agreement being formed is believed to include:

  • New taxes on businesses and the wealthy
  • Selective increases in VAT
  • Savings in pensions linked to curbing early retirement and increasing pension contributions
  • No further reductions in pensions or public-sector wages - "red lines" for Greece's Syriza government

On Wednesday, the ECB again increased additional emergency funding for Greek banks to stave off fears of a bank run - the fifth time in eight days it has done so as fearful savers withdraw up to €1bn a day from domestic banks.

Only once agreement is reached will creditors unlock the final €7.2bn tranche of bailout funds.

Analysis: Chris Morris, BBC's Europe Correspondent

Image copyright Reuters
Image caption Not everyone in Athens has welcomed the prospects of an agreement

Alexis Tsipras is returning to Brussels with criticism ringing in his ears, from members of his own party who argue that he has given up too much.

But Greece's creditors could be about to ask for more sacrifice, from a country that has already seen a quarter of its economy disappear.

The current budget proposal from Athens relies far more on raising taxes than cutting spending - and while the European Commission is pushing for a deal straight away, the IMF in particular appears to be unimpressed.

Trust is also in short supply, and Mr Tsipras will be told he has to get any prospective deal approved in the Greek parliament almost immediately, in order to give it legal backing. If he failed, he would have to resign.

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Mr Tsipras is to meet the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) - the trio evaluating his proposals.

An agreement will then have to be endorsed by Greece's parliament, with some critics at home accusing the left-wing prime minister of reneging on his party's campaign pledge to end austerity.

Austria's Finance Minister Hans Joerg Schelling told Austrian ORF radio on Wednesday it was "unforeseeable" what would happen next should no solution emerge.

German Chancellor Angela Merkel has said the Greek proposals "constitute some progress", but cautioned "there is a lot of work to be done and time is short".

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Media caption"Greeks were living a nightmare" - Pensioners react to the prospect of a deal

She said however she would only consider debt relief after the current round of negotiations, which some analysts say are essential if Greece is to escape the cycle of scrambling to secure funds to pay off looming bills to creditors.

European Commission President Jean-Claude Juncker and EU Finance Commissioner Pierre Moscovici have said they are "convinced" that a final agreement will be reached.

Tight schedule - the week ahead

  • Wednesday: Eurozone's 19 finance ministers meet to go through details of latest proposals
  • Thursday-Friday: Scheduled meeting of all 28 EU member states - any agreement could receive leaders' backing here
  • Saturday-Tuesday: Agreement will need to be approved by Greek parliament and other eurozone governments - including vote in German Bundestag
  • Tuesday 30 June: Deadline for Greek repayment of €1.6bn to IMF