Greek debt deal still up in the air

If British bookmakers are anything to go by, the chance that Athens avoids having to leave the eurozone is constantly improving. Bookmakers told Reuters news agency the odds of Greece's leaving the common currency area at at 25 percent to 30 percent - the lowest they have been this year.

The Greek government's formal request to the permanent bailout fund known as European Stability Mechanism (ESM) along a set of proposals regarding policy commitments and actions, including reforms of value-added tax rates and changes to the pension system, seem to be enough to convince bookmakers, but European officials have said they want to take a closer look at the fine print.

Greece had entered the commitment to put forth both the request and the plan for the country's economic reforms at a special summit of Eurozone leaders on Tuesday.

Malta's prime minister, Joseph Muscat, had gone into Tuesday's summit saying it was likely going to be "a waste of time," but he seemed more positively inclined towards the Greek proposals.

French President Francois Hollande called the Greek proposals "serious" and "credible," though he also added the caveat that "nothing had been decided."

No adjectives

When asked to provide adjectives describing the proposals, an EU official familiar with the negotiations of the Eurogroup, which brings together the finance ministers of all 19 eurozone countries, said he would volunteer merely a verb: "Arrived."

Margaritis Schinas, spokesperson for the European Commission, didn't go beyond stating that the Greek government had sent its reform proposals to the three institutions involved in the process, namely the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF) as well as to the president of the Eurogroup, Jeroen Dijsselbloem.

"The three institutions are currently analyzing these proposals with the intention to communicate their assessments to the Eurogroup" before the end of Friday, Schinas said.

Dijsselbloem's spokesman, Michael Reijns, also refused to provide any further detail about officials' views of the proposals.

Aside from evaluating the proposals submitted by Athens, the institutions also have to judge whether the requirements of the ESM treaty are met - namely whether Greece's situation constitutes a threat "to the financial stability of the euro area as a whole," whether Greece's public debt is sustainable and what the country's financing requirements are.

Carbon copy of June proposals?

On a number of points, the Greek government has proposed to adopt the measures that creditors had requested in order to unlock the remaining 7.2 billion euros of the second bailout two weeks ago - measures that had prompted the Greek government to break off negotiations and that were later overwhelmingly rejected by Greeks in a referendum on Sunday.

Pension reform has long been a point on contention between Greece and the international creditors. Greece has now proposed to raise the retirement age progressively to 67 by 2022, as well as to phase out a solidarity payment for pensioners by the end of 2019.

On the issue of reforming the value-added tax (VAT), the Greek government has conceded to many of the creditors' demands, and said it will introduce a VAT system with a standard rate of 23 percent. Exceptions will, however, continue to be made as reduced rates of 13 percent will be charged to energy, hotels and water, and pharmaceuticals, books and theaters will be subject to 6 percent VAT.

On the divisive issue of a favorable tax status of Greek islands, Athens says it will gradually eliminate the discounts but will not lift the special tax status for the most remote islands.

Will it be enough for a bailout?

Despite the apparent congruence of reforms proposed by Greece now and those demanded by creditors two weeks ago, it is unclear whether the former will be considered by eurozone finance ministers as providing sufficient basis for opening negotiations.

Martin Jäger, spokesman for the German Finance Ministry, said on Friday it wasn't enough to simply "present the June proposals in a new packaging."

After the summit on Tuesday, German Chancellor Angela Merkel stressed that requirements of such an ESM rescue program were much more demanding and different from what was being negotiated two weeks ago.

"We are not just talking about conditions for a program that would have run only until November of this year," Merkel said. "We are talking about a new program that would stretch over several years."

The sum of this new bailout program is widely quoted to be 53.5 billion euros, though neither the letter of request nor the reform proposals put forth by the Greek government make any mention of a specific sum, and the assessment of Greek financing needs by the European Commission, ECB and IMF is still outstanding.

"The Wall Street Journal" and "Financial Times" have both estimated that the bailout sum will be considerably bigger than 53.5 billion euros.

Steps before negotiations could begin

Should the eurozone finance ministers' meeting at on Saturday agree that there is sufficient basis for negotiations about a third bailout, an EU summit scheduled for Sunday would be canceled.

But six eurozone members - including Germany - would have to get parliamentary approval before the Eurogroup could actually give a mandate to the European Commission to start negotiating a third bailout program.

Even though a standing meeting of eurozone finance ministers is scheduled for Monday, it is highly unlikely that a mandate for negotiations could be made so quickly.

"All I can say at this stage about Monday is that there is this agenda item about Greece, and we simply don't know what we will be discussing under this agenda item," the EU official familiar with Eurogroup negotiations said.

"I understand that some of the countries that have to go to their national parliaments would be doing so on Monday or Tuesday, so it's obviously something where you can't already start mandating the institutions with commencing the negotiations."

Short-term financing needed

With Greece due to pay back 460 million euros to the IMF on Monday, and - according to analysts at the Macropolis think tank - an initial payment of civil servants' wages amounting to almost 400 million euros on the same day, the government is in urgent need of cash.

If it does not receive additional financing, Greece is widely expected to go bankrupt on July 20 when a payment of almost 3.5 million euros to the ECB is due.

These financial realities notwithstanding, the EU official made clear that there would be no discussion about possible "bridge financing" on Saturday.

"That will be dealt with if and when there is a program," he said.