Greek PM says does not have mandate to exit eurozone

In a statement Thursday, Blanchard said the world economy has “withstood the stress tests of the last two weeks fairly well”.

But all that has proved insufficient, with Greece struggling through a depression that has shrunk its output by a quarter and sent unemployment rocketing to 26 per cent. Tsipras has repeatedly insisted the debt load needs to be cut again. “But the effects on the rest of the world economy are likely to be limited”. Merkel says she isn’t in a position to assess whether that plan will meet creditors’ expectations.

The euro area could also resurrect an offer of debt relief made in November 2012 as an incentive to Greece to make good on the terms of its bailout. It also hinted that it would like some form of debt relief from earlier bailouts.

Greece, which has until midnight Brussels time (2200 GMT) to file its reform proposals for what would be its third bailout in five years, is teetering on the precipice of financial collapse.

Eurozone finance ministers will discuss the proposals in Brussels tomorrow before Prime Minister David Cameron and fellow leaders hold an emergency summit involving all 28 European Union members on Sunday. And that could mean the collapse of its banks and the return of the country’s ancient currency, the drachma.

Athens/Berlin/Washington: Greece is rushing to pull together a detailed economic package to convince European leaders that it can keep the euro.

On the other hand, Noonan said he found Tsakalotos, at his first eurogroup meeting Tuesday, straightforward and “interesting”, citing his background as a wealthy Marxist economist. “If someone has any illusion that it will not, they are naive”, he said.

But he added: “There can not be a haircut because it would infringe the system of the European Union”.

“We believe (debt restructuring) is needed in the case of Greece for it to have debt sustainability”.

Both International Monetary Fund Managing Director Christine Lagarde and US Treasury Secretary Jacob J.

Greek prime minister Alexis Tsipras has called his Syriza party deputies to a meeting this morning as he prepares the ground for a last-minute compromise with lenders to avert Greece leaving the euro zone next week. Friday’s vote should go some way towards disarming such criticism, although a further vote will be required to turn the “prior actions” into law next week if an agreement is reached, the Greek official said.

He said Russian Federation has no interest in “throwing kindling onto this fire”, and wants to see a quick resolution acceptable to all sides.

But France denied any of its officials were involved in the process.

European markets are posting solid gains amid hopes Greece will finalize a plan of reforms and following a rebound in Asia. The euro, however, was down 0.4 percent at $1.1035. Banks and the stock market have been shut for just as long.

But there was no immediate word whether Greece’s paymasters would accept the new plan, which agrees to their demands to raise the age of retirement, reform taxes and speed up privatisation, but limits changes in other thorny issues, including tax breaks for Greece’s islands and cuts to military spending.

Failure “may lead to the bankruptcy of Greece” and geopolitical problems for Europe, he said.

A demonstration of Greeks calling for their country to remain in Europe was to take place in central Athens late on Thursday (local time).

Peter Ramsauer, deputy leader of Merkel’s Bavarian CSU conservative allies, said Greece should leave and accused the Greek government of leading its partners by the nose “like dancing bears round the ring”. It might be more accurate to say that austerity-supporting governments are nervous about what will happen within their own borders if Greece touches off a pan-European frenzy of socialist looting.

The ECB capped emergency credit to Greek banks amid doubt whether the country will win further rescue loans from other countries. It has imposed restrictions on banking transactions since June 29, limiting cash withdrawals to 60 euros ($67) per day to stanch a bank run.

“The bank holiday is extended to July 13”, the finance ministry said in a statement late on Wednesday.