The Greek parliament has backed government proposals for economic reforms in the hope of ending the country’s debt crisis.
Punishing tax rises and spending cuts are being offered in return for a financial lifeline of 53.5 billion euro (£38.5 billion) to prop up the country’s failing banking system and avoid the possibility of crashing out of the single currency.
Finance ministers from the eurozone nations will consider the latest proposals to give the debt-stricken country a fresh bailout.
During a late-night debate in Athens, Greek prime minister Alexis Tsipras acknowledged that the measures were a long way from the anti-austerity platform his radical Syriza party was elected on.
Urging the MPs to back his negotiating position, Mr Tsipras admitted he had made mistakes during his tenure and described the struggle with the creditors - the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) – as a battle.
“Now I have the feeling we’ve reached the demarcation line,” he said. “From here on there is a minefield.”
Austerity policies demanded by the creditors were rejected by the Greek people in a referendum on Sunday, but Mr Tsipras insisted that his latest proposal contains measures that would help the economy and would unlock sufficient financing for the country to emerge from its protracted crisis and see its massive debt tackled.
Athens has drawn up the plans in an attempt to secure its formal request for a bailout through the European Stability Mechanism (ESM).
Greece’s new finance minister Euclid Tsakalotos stressed the urgency of the loan request “given the fragility of our banking system” and lack of liquidity.
He told the Greek parliament the referendum result had strengthened the government’s hand in seeking a new deal. “I think after the referendum we are in a stronger position,” he said.
The proposals from Athens would provide three years of financing with repayments spaced more evenly than under previous bailouts, he said, and claimed there was a growing consensus for the need for a long-term debt relief agreement by 2022.
He added: “I think most of what we are asking for on debt relief is going to happen.”
Eurozone finance ministers will discuss the proposals in Brussels today before Prime Minister David Cameron and fellow leaders hold an emergency summit involving all 28 European Union members on Sunday.
Downing Street said the eurozone had to work with Greece to find a way out of the crisis.
Bank closures in Greece have been extended until Monday and Greeks are limited to withdrawing just 60 euro (£43) per day after the imposition of capital controls.
British tourists have been warned to take sufficient cash to cover expected costs and emergencies and to ensure they have supplies of their usual prescription medicines in case of shortages.