Brussels: Euro zone leaders could hold a further emergency summit on Sunday to approve a plan to aid Greece if creditor institutions are satisfied with a Greek loan application and reform commitments, two senior EU sources said.
The leaders were meeting on Tuesday evening in Brussels with Greek banks shuttered and fast running out of cash and the Greek economy on the verge of collapse.
The sources set out a tentative timetable that could offer a breakthrough to keep Greece afloat and in the euro zone, provided it accepts credible reforms and spending cuts to make its public finances sustainable in the mid-term.
Greece is expected to submit a formal request for a medium-term assistance programme from the European Stability Mechanism rescue fund within hours and euro zone finance ministers have said they will hold a conference call in Wednesday morning to consider that request.
The three institutions representing the creditors -- the European Commission, the International Monetary Fund and the European Central Bank -- would then take two or three days to make a first analysis of the feasibility of the Greek proposals.
In parallel, Greek Prime Minister Alexis Tsipras was expected to put forward a reform plan on Wednesday that would entail so-called "prior actions" to be put into law in Greece before the next emergency summit.
A Greek government official said it would make sense to put some initial measures through parliament before the weekend.
If all went to plan, the German parliament could on its last day before the summer recess give the government a legally required mandate to start negotiations on a new programme for Greece, one of the sources said.
If the institutions gave their green light and the German parliament approved, euro zone leaders could meet again probably on Sunday evening to give political approval for detailed negotiations on a two-or-three-year bailout programme.
That deal could also include some commitment by the euro zone to reprofile Greece's debt, but no write-downs, two sources said.
They said new Greek Finance Minister Euclid Tsakalotos had not requested any "haircut" during a meeting of euro zone finance ministers but had used the term "reprofiling", which involved stretching out the maturities of existing loans and possibly lowering interest rates and granting a longer debt service moratorium.
Greece would receive a short-term interim financing arrangement to meet a crucial 3.5 billion euro July 20 bond redemption to the ECB and to clear arrears of 1.5 billion euros with the IMF, another source said.
A Greek government source confirmed that Athens was seeking an interim financing deal to cover its debt service hump over the summer ahead of a longer-term programme.
The EU sources were reluctant to discuss how Greece's short-term needs would be funded.
Two sources said it would be a mixture of releasing 1.9 billion euros in profits returned by the ECB to member governments on its Greek bond holdings, and either bilateral loans from friendly countries or a decision by the ECB to allow Greece to issue more short-term Treasury bills.
However, a source familiar with the discussions said the ECB could not allow Greek banks to buy any more Treasury bills, since that would clash with its responsibility as banking supervisor for ensuring their solvency and avoiding indirect monetary financing of the Greek government.
Political will
Eurozone nations showed the "political will" to help Greece reach a bailout deal at emergency talks in Brussels Tuesday despite a referendum that rejected creditors' terms, new Greek finance minister Euclid Tsakalotos said.
Tsakalotos, who replaced maverick Yanis Varoufakis in the job on Monday, told reporters there had been "progress" in meetings with his 18 counterparts from the single currency and addedthere was "political will to give Greece a new chance".
Asked why he had not brought a new set of Greek bailout reform proposals for the finance minister talks, which came ahead of a crucial eurozone summit, the Oxford-educated minister said it was "more complicated than that".
"We'll see if it (the presentation of Greece's proposals) will happen this evening or tomorrow," he added.
Common ground
The Greek government said in Athens earlier it would present Wednesday a "common ground document" for a debt deal that would "take into account" the concerns of international creditors.
It is also set to make a formal request to the EU's bailout fund for a third rescue programme, Eurogroup chief Jeroen Dijsselbloem said earlier.
A European source close to the talks said that Tsakalotos had "passed his rite of passage" during his meeting with his eurozone colleagues, adding that he showed "a lot of intelligence and enormous modesty".
The Greek minister was looking for a new bailout programme of "two or three years" but that would take a long time to discuss, meaning there needed to be "bridge financing" for coming weeks, the source said.
Eurozone leaders could hold a new summit on Sunday to discuss the next steps if lower-level talks in coming days go well, the source added.
But, underlining the divisions within the EU, another European official said there was "disappointment among finance ministers" that Tsakalotos had not provided any concrete proposals.
Tuesday's summit was designed to "start a last ditch effort to save this situation".
