Greek Defense Minister Panos Kammenos, who is also the leader of the right-wing junior partner in the coalition led by the left-wing Syriza party, told reporters in Athens on Thursday afternoon that the government would submit its reform proposals to the international creditors "shortly."

He was speaking as Prime Minister Alexis Tsipras held a cabinet meeting to try to hammer out the proposals, due in Brussels by midnight (2200 UTC). Earlier, Tspiras had discussed Greece's options with senior officials in the finance ministry.

Greece is seeking a third bailout from the institutions formerly known as the "troika," the International Monetary Fund, the European Commission and the European Central Bank, days after it failed to make a 1.6-billion-euro ($1.76-billion) repayment to the IMF at the end of last month.

Over the past five years, Athens has already received 240 billion euros in two previous bailouts, the last of which expired on June 30. Its creditors also forgave 107 billion euros of Greek debt three years ago.

Debt relief

Now the Greeks are not just looking for more funds but, also some form of fresh debt relief, particularly in view of comments made by the managing director of the International Monetary Fund, Christine Lagarde, late on Wednesday. In a speech at a conference in Washington, she said Greece would need debt restructuring "which we believe is needed in the case of Greece for it to have debt sustainability."

However, getting the institutions to agree to that may be more easily said than done. While there have been conciliatory tones coming out of Brussels and some other European Union capitals on the issue, Germany, which has footed the bulk of the bill in the previous bailouts is strictly against a fresh debt cut.

"I have said that a classic 'haircut' is out of the question for me and that hasn't changed between the day before yesterday and today," Merkel told reporters during a visit to Sarajevo on Thursday.

Later, Merkel's finance minister, Wolfgang Schäuble, conceded that the IMF was probably right in saying that Greece needed debt restructuring, it couldn't come from the European institutions "because it would infringe on the system of the European Union and after all the European Union is a community of common laws."

"So the leeway we have on the restructuring of debt or the reprofiling of debt is very low," Schäuble added.

Bank closures extended

Meanwhile, the situation for the Greek people continues to deteriorate, with capital controls to remain in place until at least next Monday. These allow Greeks to withdraw a maximum of 60 euros daily - if they can find an ATM that is stocked with cash. Greek pensioners, who don't have bank cards, can withdraw a maximum of 120 euros per week.

pfd/kms (AP, dpa, Reuters, AFP)