EU and IMF give positive response to Greece’s bailout request

EU and IMF officials have given euro zone governments a positive assessment of Greece’s request for a new bailout, a source close to the matter said, making it likely they will agree today to open talks on lending Athens tens of billions of additional euros.

Experts from the European Commission, European Central Bank and the International Monetary Fund spent Friday reviewing the Greek case for aid and proposals for economic reforms from prime minister Alexis Tsipras that will be conditions for any loans.

The positive evaluation, along with a conclusion that Athens currently needs some €74 billion to meet its obligations, will form a key part of discussions among euro zone finance ministers when they meet in Brussels today.

Brussels meeting

Euro zone finance ministers are gathering in Brussels in a last-ditch attempt to resolve the ongoing Greek crisis, but continuing resistance in Berlin to the new reform package constrained hopes that an official agreement can be reached.

Depsite the cautious welcome given by EU officials to the reform plan submitted by Greece to creditors on Thursday, senior sources in Berlin say that this weekend's talks in Brussels are just the first of several hurdles to Germany backing a third bailout package for Greece.

Minister for Finance Michael Noonan will this afternoon join his euro zone counterparts to consider the 13-page reform proposal submitted by Greek prime minister Alexis Tsipras on Thursday, in what is widely seen as the last opportunity for Greece to avoid an exit from the euro zone.

With the Greek economy now in freefall and its banks running out of cash, it needs to strike a deal to allow the European Central Bank to increase its provision of emergency funding to the Greek banking sector next week.

Following months of fruitless and acrimonious negotiations, the Greek government on Thursday submitted a fresh proposal outlining how it plans to make €13 billion worth of cuts in exchange for €53.5 billion of loans from the EU and IMF.

The Greek parliament was expected to approve the proposals late last night, after the opposition parties indicated they would support the package.

While Mr Tsipras urged Syriza party colleagues to help Greece stay in the euro zone by approving the tough proposal, he faced resistance from some MPs left stunned by his acceptance of previously rejected austerity measures.

Five Syriza MPs signed a letter saying it would be better to return to the drachma than to accept more austerity with no debt write-off.

The proposals were expected to be approved with help from the opposition parties, but losing a significant number of his own deputies would threaten Mr Tsipras’s majority and destabilise his coalition.

Parliament demonstration

Large crowds demonstrated outside the Greek parliament last night as the debate on the package was taking place.

With EU officials still scrutinising those proposals last night, there was a tentative welcome for the proposals from senior EU figures yesterday, with French president Francois Hollande describing the proposals as "serious and credible".

But other countries, including Lithuania and Slovakia, were less positive.

With Germany requiring parliamentary approval for any third bailout package for Greece, the main barrier to a deal being agreed lies in Berlin.

The spokesman for German chancellor Angela Merkel said yesterday that "only when the Greek government describes - seriously, and reliably - the key points it is ready to implement as reforms can the [German] government go to the Bundestag and ask for a mandate to begin reform negotiations."

Writing in The Guardian, former Greek finance minister Yanis Varoufakis said that the "preferred outcome" of German finance minister Wolfgang Schauble was a Greek exit from the euro zone.

Despite continuing uncertainty about whether all 19 euro zone member states will back the plan for a new loan package for Greece, stock markets rallied yesterday in anticipation of a deal this weekend to avert Greece’s exit from the euro zone.

In a reminder of the precarious state of the Greek banking system, rating agency Moody’s predicted that bank deposits could run out by tomorrow, and said that the recapitalisation of Greek banks was now virtually inevitable.

Additional reporting: Reuters