Eurozone finance chiefs have warned of tough negotiations ahead as they meet to decide whether Greece’s new reform proposals merit a third debt bailout.
Germany’s Finance Minister Wolfgang Schaeuble said the talks would be “extremely difficult”.
Eurogroup chief Jeroen Dijsselbloem spoke of a “major issue of trust” over Greece’s resolve to implement reform.
But Greece’s Economy Minister Giorgos Stathakis told the BBC his government was “committed to moving forward”.
Greek MPs have voted in favour of the measures proposed by PM Alexis Tsipras – despite the fact that many of the ideas had been rejected by the Greek people in last Sunday’s referendum.
As the 19 eurozone ministers gathered in Brussels to discuss Greece’s plans, many said they remained to be convinced that Athens would follow through on its proposals.
Analysis: Theo Leggett, BBC News
The Frankfurter Allgemeine Zeitung newspaper says it has seen a German position paper which sets out two possible options for Greece.
1. It could transfer assets worth €50bn into a special fund, to be sold off to pay creditors. 2. Take a a five year “time out” from euro membership, in order to restructure its debts.
A note of caution. Although this paper appears to come from within the finance ministry, it does not necessarily reflect Germany’s actual position in the talks. Indeed, there are some indications that it doesn’t.
Officials may well have been exploring numerous different options. These could simply have been leaked in order to put more pressure on Greece during the negotiations.
It is hard to see the benefits of casting Greece into a limbo where it would apparently be neither a full member of the euro, nor committed to producing its own currency and rebuilding its economy outside the single currency zone.
However there seems little doubt that, even if this weekend’s talks prove fruitful, future negotiations between Greece and its creditors are likely to be fraught.
“There are many concerns, quite a bit of criticism both on the content of the proposals, but also on the even more difficult issue of trust,” Mr Dijsselbloem said.
“How can we really expect this government to implement what it’s now promising. I think it’s going to be quite a difficult meeting.”
Mr Schaeuble was blunt: “We will definitely not be able to rely on promises.”
Reports are emerging that Germany has drawn up plans for Greece to temporarily exit the eurozone if this weekend’s talks fail – something Athens says it has not been made aware of.
Greece’s economy minister appeared confident that a deal would be done “in the next 24 hours”.
“There are certain improvements compared to the proposal that was on offer before the referendum,” Mr Stathakis told the BBC. “The main one is debt restructuring.”
- 11 July: Eurozone finance ministers discuss plans (Brussels 13:00 GMT)
- 12 July: Eurogroup leaders meet (14:00 GMT) followed by summit of all 28 members of the European Union (16:00 GMT). Both Brussels
- 20 July: €3bn payment due from Greece to the European Central Bank
Greece is asking creditors for €53.5bn ($59.47bn; £38.4bn) to cover Greece’s debts until 2018, but the amount of the new bailout could reach €74bn, as Greece seeks a restructuring of its massive debt, which it says is unsustainable.
Of the €74bn, €58bn could come from the EU’s bailout fund, the European Stability Mechanism, with €16bn from the IMF, sources said.
The measures submitted in the new Greek document include:
- tax rise on shipping companies
- unifying VAT rates at standard 23%, including restaurants and catering
- phasing out solidarity grant for pensioners by 2019
- €300m ($332m; £216m) defence spending cuts by 2016
- privatisation of ports and sell-off of remaining shares in telecoms giant OTE
- scrapping 30% tax break for wealthiest islands.
Mr Tsipras has admitted that the package “entails many proposals that are far from our pledges, from what we feel is right for the recovery of the economy” and were only “marginally better” than proposals put forward by the creditors last month.
Some members of the prime minister’s own Syriza party voted against the proposals during the vote in parliament overnight, angry at his apparent U-turn on austerity.
Greece in numbers
Greece’s debt mountain
177% country’s debt-to-GDP ratio
25% fall in GDP since 2010
26% Greek unemployment rate
But, without a deal, Greece risks crashing out of the euro.
Banks have been closed for two weeks now and a €60 (£43; $66) daily limit on cash machine withdrawals, imposed on 28 June, remains in force for Greek citizens. Many people say they have only been able to withdraw €50, as there are no smaller denomination notes.
Greece’s creditors – the European Commission, European Central Bank and International Monetary Fund – have already provided more than €200bn in two bailouts over the past five years.
The second expired on 30 June, when Greece fell into arrears on an IMF loan.
Following the eurozone finance ministers summit, Eurogroup leaders will meet in Brussels on Sunday afternoon, followed two hours later by a full meeting of EU leaders.
At the scene: Jasmine Coleman, BBC News, Athens
Punters are watching for their numbers on TV screens outside a betting cafe in central Athens. Next to broadcasts of motorbike racing, lottery draws and athletics, TV commentators give the latest on the debt crisis.
But George Vassis, 45, is not betting on the politics. “Who knows what will happen?” he asks. Like many here, he is weary after months of talks and economic decline.
He runs a business information company and wants an end to the current deadlock. “Something must be done. The measures the government is offering are bad, but it’s the only way to go forward.”
Mr Tsipras has faced backlash to his proposals, but for George much of the damage has already been done. His company will have to make redundancies either way – he is just waiting to find out how many.
How easy is it to swap currencies?