A plan for Greece to reform its economy being drawn up in Athens with the help of France may include as much as €13bn of cuts and tax increases.
The proposal needs to be completed before a midnight deadline. Greek news source Kathimerini reports that because of the closure of banks and the stock exchange the economy is in a recession of 3%.
Greece was faced with a proposal of €8 to €9bn (£6.4bn, $9.9bn) worth of cuts in the 5 July referendum that has now grown by billions.
— Yannis Koutsomitis (@YanniKouts) July 9, 2015
Those cuts will likely come in exchange for a deal to restructure Greek debt as a key plank of the economic plan. But this proposal has proved a major sticking point between Greece and its creditors before. The tone struck on 9 July was not conciliatory.
Early in the day, Donald Tusk, President of the European Council, said: "A realistic proposal from Athens needs to be matched by a realistic proposal from creditors on debt sustainability to create a win-win situation."
Tusk's comments came a day after Greek Prime Minister Alexis Tsipras stood in the European parliament to ask for a new three-year aid programme from Europe's bailout fund. In return, he promised immediate reforms of taxes and pensions.
But on 9 July, German Chancellor Angela Merkel said a cut to the face value of Greek debt "is out of the question".
German Finance Minister Wolfgang Schaeuble said there is "very low" area in which to manoeuver Greek debt restructuring. He said he agreed that cutting the value of Greek debt is one of the only things that would make the debt sustainable, but would be impossible under EU rules.
- GERMANY'S SCHAEUBLE SAYS CANNOT BE A HAIRCUT BECAUSE IT WOULD INFRINGE SYSTEM OF EUROPEAN UNION so they are out
— FxMacro (@fxmacro) July 9, 2015
Germany holds the purse strings on Greek debt to the European Central Bank (ECB). The country is due to make a €3.5b payment on its debt to the ECB on 20 July. Without a deal, it will default on this payment.
Greece owes a total of total €323bn to the ECB, International Monetary Fund (IMF) and other creditors.
The IMF has backed restructuring Greek debt and says it needs a 20-year period in which to rebuild before it begins repayments. The country, it said, needs €60bn in funds and debt relief.
Greek MPs are on call to vote on a new debt deal package to the country's creditors on 10 July.