Disagreements persist as eurozone finance ministers and leaders planned to convene Saturday and Sunday to decide how much more money and political capital they are prepared to spend on keeping the flailing country afloat.
Only unanimous agreement on the amount of new rescue loans and debt relief to grant Athens will allow the country to avoid full-on bankruptcy and Greek banks to reopen Monday with euros in their tills.
Some European officials cautioned that even a broad deal this weekend could collapse later once it comes to nailing down the details and implementing the new measures. The two sides “might end up in agreement in principle,” said one official. “But whether [a bailout] program [is] ever accepted or money disbursed is another thing.”
The three institutions that have been overseeing Greece’s aid packages—the International Monetary Fund, the European Commission and the European Central Bank—told national finance ministries early Saturday that they believe the country is eligible for another support program, according to a European official. An official familiar with those talks said new financing needs had been the most divisive issue during that quality check.
The Greek parliament was also debating it into the early morning hours. In an emotional address after midnight in Athens, Greek Prime Minister Alexis Tsipras, in office only since January, said the proposal contains measures that would help the economy.
“There is no doubt that for six months now we’ve been in a war,” he said. “Now I have the feeling we’ve reached the line of demarcation. From here on there is a minefield, and I don’t have the right to dismiss this or hide it from the Greek people.”
While the vote in Athens won’t create new legislation, European officials have said that it will give a good indication of the government’s ability and willingness to follow through on its new plans.
After days in which a Greek exit was openly discussed in Brussels and Frankfurt, stock markets rallied Friday on both sides of the Atlantic and the euro strengthened on the prospect of a last-minute deal.
French President François Hollande, whose government had helped Athens prepare its new proposals, called them “serious and credible.” Even Slovakia’s finance minister, one of the harshest public critics of Greece’s efforts in recent months, gave a cautious thumbs-up.
“It seems we have progress on Greece,” Peter Kazimir said in a Twitter message, while cautioning that some austerity measures may have to be implemented faster.
“One can wonder how quickly can [a] caterpillar turn into a butterfly,” Mr. Kazimir added.
The German government said it was too early to evaluate Greece’s proposals, however, while Chancellor Angela Merkel’s conservative allies in parliament questioned whether the Greek government had any credibility to implement overhauls.
A spokesman for German Finance Minister Wolfgang Schäuble once again rejected writing off any of the previous rescue loans—a move that the IMF has called for.
U.S. Treasury Secretary Jacob Lew was among those cautiously optimistic about an emergency-financing deal.
“If you look at the proposal that’s on the table last night, it certainly looks like they are getting closer,” Mr. Lew said in New York. “It’s certainly in a better place today than it was a couple of days ago.”
“But I’ve said that before in the last few weeks,” he said. “We’ve also seen that they’ve had trouble going from close to closed.”
There isn’t too much time for deliberations. Greek banking officials have warned that the country’s banks may run out of cash to allow even limited withdrawals from depositors after Monday. And on July 20, the country has to pay €3.5 billion ($3.9 billion) in bonds and €700 million in interest to the European Central Bank.
Without a new aid transfer by then, the left-wing government of Mr. Tsipras will default on the institution that has kept its lenders on life support in recent weeks. Failure to pay could lead the ECB to cut emergency lending to Greek banks, a move that would likely force the government to print its own currency to recapitalize them.
Italian Prime Minister Matteo Renzi said he was more optimistic about a deal with Greece, but added that an eventual agreement wouldn’t “differ much” from what creditors proposed to Athens about 15 days ago.
Germany, which is eager to keep new support to Greece to a minimum, is bound to clash this weekend with the IMF over the fund’s demands for steep debt write-downs and its high financing estimates.
But ditching the IMF from the new bailout would create problems in Berlin and other hawkish capitals, where parliaments have tied bailout approvals to its participation.
In documents submitted late Thursday, the Greek government said it would need €53.5 billion in new loans to get it through the next three years, along with enough debt relief to make repayments more manageable.
Shortly after, the IMF warned that its previous estimates for the amount of debt relief and bailout loans Greece needs in the coming years are now outdated.
Two weeks of capital controls have hit Greece’s economy and financial system hard. That means IMF estimates that foresaw more than €60 billion in new rescue loans and a doubling of existing loan maturities to 60 years are no longer sufficient, the fund’s chief economist said.
In Athens, some members of the government and Mr. Tsipras’s ruling Syirza party voiced doubts about the plan—especially given the overwhelming rejection of similar measures during last weekend’s referendum.
Energy Minister Panagiotis Lafazanis, who leads the party’s far-left faction, said the proposals were incompatible with Syriza’s program. “Greece’s proposal cannot solve the country’s problems and doesn't give it a positive outlook,” Mr. Lafazanis said.