Proposals from Greece to explain how it will meet conditions for a new international bailout loan were received late yesterday prior to a midnight deadline by Jeroen Dijsselbloem, who chairs the Eurogroup of eurozone finance ministers, his spokesman said.

“New Greek proposals received by Eurogroup President Dijsselbloem,” he tweeted. “Important for institutions to consider these in their assessment.”

Earlier yesterday Tsipras chaired a marathon Cabinet meeting to finalise a package of tax hikes and pension reforms to send to eurozone authorities in a race to secure agreement at the weekend on a third financial rescue.

Meanwhile, Germany conceded yesterday that Greece would need some debt restructuring as part of any new loan programme to make its economy viable as the Greek cabinet raced to finalise reform proposals to avert an imminent economic meltdown.

The admission by German Finance Minister Wolfgang Schäeuble came hours before a deadline for Athens to submit a reform plan meant to convince European partners to give it another loan to save it from a possible exit from the euro.

Greece has already had two bailouts worth €240 billion from the eurozone and the Inter­national Monetary Fund, but its economy has shrunk by a quarter, unemployment is more than 25 per cent and one in two young people is out of work. Schäeuble, who has made no secret of his scepticism about Greece’s fitness to remain in the currency area, told a conference in Frankfurt: “Debt sustainability is not feasible without a haircut and I think the IMF is correct in saying that.

Greek Prime Minister Alexis Tsipras walking into Parliament in Athens, Greece yesterday.Photos: Reuters

Tsipras chairs marathon Cabinet meeting to finalise reforms package

But he added: “There cannot be a haircut because it would infringe the system of the European Union.”

He offered no solution to the conundrum, which implied that Greece’s debt problem might not be soluble within the eurozone.

However, Schäeuble did say there was limited scope for “reprofiling” Greek debt by extending loan maturities, shaving interest rates and lengthening a moratorium on debt service payments.

A pro-Euro protester holding a European Union and a Greek national flag during a rally in front of the parliament building in Athens, Greece, yesterday.

European Council President Donald Tusk, who will chair an emergency eurozone summit tomorrow to decide Greece’s fate, joined growing inter­national calls for Athens to be granted some form of debt relief as part of any new loan deal if Prime Minister Alexis Tsipras finally delivers convincing reforms.

Tusk said a realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors.

“Otherwise, we will continue the lethargic dance we have been dancing for the past five months,” he said.

Failure to reach a deal tomorrow, including releasing some money to enable Athens to cover debt service over the next few weeks could lead to a collapse of Greek banks next week.

If there is no agreement, all 28 EU leaders will discuss measures to limit the damage from a Greek collapse, including humanitarian aid, possible border controls and steps to mitigate the impact on neighbours, EU officials said.

Just how uncertain the coming days are was highlighted when European Central Bank President Mario Draghi voiced highly unusual doubts about rescuing Greece.

Italian daily Il Sole 24 Ore quoted the ECB chief as saying he was not sure a solution would be found for Greece and he did not believe Russia would come to Athens’ rescue.

Asked if a deal to save Greece could be wrapped up, Draghi said: “I don’t know, this time it’s really difficult.”