ATHENS, Greece—Hopes that Greece can get a rescue deal that will prevent a catastrophic exit from the euro rose on Thursday, after key creditors said they were open to discussing how to ease the country’s debt load, a long-time sticking point in their talks.
Greece’s government is racing to finalize and submit a plan of reforms for its third bailout on Thursday to give creditors time to review it ahead of a summit of the European Union’s 28 members on Sunday.
While creditors are waiting to see whether Greece will offer the full range of economic measures they have asked for, Donald Tusk, who chairs the EU summits, indicated that European officials would make an effort to address Greece’skey request for debt relief.
“The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation,” Tusk said.
Greece has long argued its debt is too high to be paid back and that the country requires some form of debt relief. The International Monetary Fund agrees with the premise, but key European states like Germany have resisted the idea.
Meanwhile, many ATMs had a shortage of 20 euro notes, effectively reducing the daily withdrawal limit to 50 euros.
If Tsipras does not get a deal, Greece faces an almost inevitable collapse of the banking system, which would be the first step for the country to fall out of the euro.
“I believe he will have to get an agreement. We will pay dearly for it, but at least we'll get an agreement,” said mechanic Pantelis Niarchos, walking down the street in central Athens.
After months of fruitless negotiations with Tsipras’ government, elected in January on promises to repeal bailout austerity, the skeptical eurozone creditor states have said they want to see a detailed, cost-accounted plan of the reforms.
Greece’s financial institutions have been kept afloat so far by emergency liquidity assistance from the European Central Bank. But the ECB has not increased the amount in days, leaving the lenders in a stranglehold despite capital controls.
German ECB governing council member Jens Weidmann argued Greek banks should not get more emergency credit from the central bank unless a bailout deal is struck.
He said it was up to eurozone governments and Greek leaders themselves to rescue Greece.
The central bank “has no mandate to safeguard the solvency of banks and governments,” he said in a speech.
The ECB capped emergency credit to Greek banks amid doubt whether the country will win further rescue loans from other countries. The banks closed and limited ATM withdrawals because they had no other way to replace deposits.
Weidmann said he welcomed the fact that central bank credit “is no longer being used to finance capital flight caused by the Greek government.”
