Greece given final chance for deal, EU Summit on Sunday

There is a slight sense of optimism in the markets that Greece will reach a deal by the end of this week to receive financial aid. An EU Summit of all twenty-eight EU leaders will be held on Sunday.

Meanwhile by Friday Greece has to submit its proposals for reforms after the Greek government formally asked for a three-year bailout from the Eurozone’s rescue fund, known as the ESM (European Stability Mechanism).

Pressure is growing on both sides to come to some kind of deal and avert a potentially imminent Greek exit from the euro. U.S. Treasury Secretary Jacob Lew said for the first time publicly Wednesday that Europe needs to restructure Greece’s huge debt as a key part of an emergency-financing solution, a move Germany has resisted.

Greece’s letter is a first step toward fulfilling a demand by international creditors to come up with tougher measures in return for desperately needed financing that could keep the country from bankruptcy and even worse economic turmoil.

The letter reiterates a call for debt relief, but also says Greece will put in place tax-reform and pension-related measures by the beginning of next week, though it doesn’t go into detail. Greek Prime Minister Alexis Tsipras said his government would present more concrete measures on Thursday by a midnight deadline.

In his first address to the full European Parliament in Strasbourg, France, Tsipras mixed conciliation with defiance, pointing to his countrymen’s resounding “no” vote in Sunday’s national referendum as evidence he has a fresh mandate to demand a good deal for Greece.

The full list of overhauls and budget cuts is what will determine whether the application for a new rescue program will be approved by the rest of the Eurozone. The currency union’s leaders will assess whether it makes sense to start formal negotiations on a bailout program at an emergency summit on Sunday.

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