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Greek PM promises "credible" reform

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Greek Prime Minister Alexis Tsipras has vowed to present “credible” reform plans before a Thursday deadline set by exasperated European leaders, as Athens formally asked for a new bailout to avoid crashing out of the euro.

Despite mounting fears of a looming “Grexit” from the single currency, the French and Spanish premiers on Wednesday welcomed the latest “positive” developments, just days before a deal needs to be reached for Athens to avoid bankruptcy.

Leftist leader Tsipras was greeted by a mixture of boos and cheers as he addressed the European Parliament, defending his decision to hold a bailout referendum last Sunday that dismayed Europe.

“The Greek government will tomorrow file new concrete proposals, credible reforms, for a fair and viable solution,” Tsipras told European lawmakers in Strasbourg, France during a heated debate.

Tsipras also appealed for unity on all sides after six months of deep rifts with eurozone colleagues over the Greek debt crisis, saying: “Let us not allow it to become a divided Europe.”

The Greek government promised it would start pension and tax reforms next week, as demanded by creditors, in return for a three-year loan to drag its financial system back from the brink of collapse.

French Prime Minister Manuel Valls said fresh proposals made by Athens in exchange for a new European bailout were a step in the right direction, describing the request as “balanced, positive”.

He reiterated France’s stance that keeping Greece in the eurozone was a “geopolitical issue of the highest importance”.

Spanish Prime Minister Mariano Rajoy also said of Greece: “The tune has changed, it’s not what we were hearing until now and that’s positive.”

EU President Donald Tusk however warned that a special summit of EU leaders on Sunday was the final chance for a deal to avoid a “Grexit”, which would have global repercussions.

“This is really and truly the final wake-up call for Greece and for us, our last chance,” said Tusk, warning that failure “may lead to the bankruptcy of Greece” and cause geopolitical problems for Europe.

Greece’s banks remain closed for a second week, amid a cash crisis which saw the country last month become the first developed economy to default on an International Monetary Fund loan payment.

Eurozone leaders lost patience at a crisis meeting in Brussels on Tuesday after Tsipras and his new Finance Minister Euclid Tsakalotos turned up without any concrete plans on paper.

They ordered Athens to file a complete reform plan by midnight on Thursday (0800 AEST on Friday), with Tusk saying the “final deadline” for a deal would then be Sunday’s summit of all 28 European Union leaders.

In a formal letter on Wednesday to the European Stability Mechanism, the lender of last resort set up during the eurozone debt crisis, Tsakalotos said Greece would “immediately implement a set of measures as early as the beginning of next week”.

The ESM confirmed that it had “received the Greek request”, the first step demanded by the eurozone leaders towards reaching a deal that many countries remain sceptical about.

Greece has had two previous international bailouts worth 240 billion euros ($A354.66 billion), the last of which expired on June 30.

The price of those loans was five years of harsh austerity measures, and in Sunday’s Greek referendum voters overwhelmingly rejected more of the same offered by international creditors.

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