Greece given until Sunday to make debt proposals

European Union leaders are to hold a decisive summit on the Greek debt crisis Sunday, with Prime Minister Alexis Tsipras being pressed for proposals that would stave off financial chaos, and a widely-feared exit from the eurozone.

Chancellor Angela Merkel said on Tuesday she hoped there would be enough reform proposals from Greece to make it possible for the German parliament to approve negotiations. Merkel said after the summit that Greece needed a debt program lasting "several years."

Merkel and French President Francois Hollande had on Monday said they expected Greece to come forward with concrete proposals on a way forward in the Tuesday meeting.

Italian Prime Minister Matteo Renzi said he believed a definitive deal would be possible on Sunday. "Tonight the decision is that we wait until Sunday for the new proposal to the European institutions by the Greek government," said Renzi.

European Central Bank (ECB) chief Mario Draghi assured eurozone leaders that the ECB would do the necessary to keep Greek banks afloat until the Sunday summit.

Stern warning from Tusk

EU President Donald Tusk said the final deadline to reach an agreement on a new bailout for Greece "ends this week."

"The Greek government will, on Thursday at the latest, set out in detail its proposals for a comprehensive and specific agenda," said Tusk. "Inability to find an agreement may lead to bankruptcy of Greece and insolvency of its banking system," he added.

Greek premier Alexis Tsipras said Athens was seeking a "final exit" from the crisis with a reform-for-aid proposal that would be ready by the end of the week.

Viewing the 'final exit'

"The discussion was held in a positive atmosphere," he said, referring to Tuesday's talks. "The process will be fast, it starts in the coming hours with the aim of concluding it by the end of the week, at the latest."

"The Greek side will continue the effort, having the strong weapon of the Greek people's verdict," added Tsipras.

A referendum on Sunday saw 61 percent of Greek voters reject the last set of demands for more austerity from the EU and IMF. Tsipras is due to address the European Parliament in Strasbourg on Wednesday, when it is thought he may set out further details of Greece's plans.

rc/jr (AFP, AP, dpa, Reuters)