Al Jazeera’s Kamahl Santamaria explains the background of the Greek debt crisis.
Greek banks will remain closed until Monday, the country’s finance ministry has said, as the government raced to come up with a new proposal to present to creditors for a new bailout deal.
“The bank holiday is extended to July 13,” the finance ministry said in a statement on Wednesday.
The banks have been closed since June 28, with withdrawals by Greeks limited to 60 euros ($66) to stave off a liquidity shortage after the government called a referendum on EU-IMF creditors’ terms for an international bailout.
A ministry source also told the AFP news agency withdrawal limits would remain unchanged.
The referendum turned out a 61-percent result against the creditors’ latest bailout proposals, souring relations between Athens and many of its European peers.
The capital controls have kept Greek banks going but authorities have struggled to keep ATMs supplied with cash, and additional obstacles to imports have led to fears of shortages in goods and medicine.
Deadline hours away
Thursday midnight is the deadline for Greece to submit new bailout plans to unlock billions of euros of fresh aid desperately needed to keep its struggling economy afloat. Sunday is the deadline set by the EU to agree on a bailout deal with Athens in return for economic reforms.
“The Greek government will tomorrow file new concrete proposals, credible reforms, for a fair and viable solution,” Greek Prime Minister Alexis Tsipras told the members of the European Parliament in Strasbourg, France, on Wednesday.
On the same day, the new Greek finance minister sent a letter to the European Stability Mechanism (ESM), the EU’s bailout fund, requesting loan assistance to carry out its planned pension and tax reforms demanded by creditors.
“We propose to immediately implement a set of measures as early as the beginning of next week including: tax reform related measures; pension related measures” if the loan from the ESM was forthcoming, the the letter signed by Minister Euclid Tsakalotos said.
The ESM was set up as a lender of last resort for eurozone states to ensure the stability of the European single currency, the euro.
Tsakalotos said the letter underlined “the urgency of our loan request at this time given the fragility of our banking system, our shortage of available liquidity, our upcoming obligations, our build-up of internal arrears, and our expressed desire to clear our outstanding arrears with the International Money Fund [IMF] and the Bank of Greece”.
The government’s room for manoeuvre, however, is restricted by Sunday’s referendum which showed Greek voters overwhelmingly opposed to further cuts under the austerity terms demanded by the creditors.
Greece is teetering on the brink of financial collapse and a possible exit from the eurozone after the developments of the past two weeks.
On June 30, Greece’s last bailout programme expired and the country failed to honour a loan repayment to the IMF, cutting it off from further credit from this organisation until it settles the $1.7bn amount.