Greece took a step back from the abyss on Monday with the presentation of new budget proposals that euro zone leaders welcomed as a basis for a possible agreement in the coming days to unlock frozen aid and avert a looming default.
European Council President Donald Tusk, who chaired an emergency summit of leaders of the 19-nation currency bloc, called the Greek proposals "a positive step forward". He said the aim was to have the Eurogroup finance ministers approve a cash-for-reform package on Wednesday evening and put it to euro zone leaders for final endorsement on Thursday morning.
However, there must first be a detailed agreement with representatives of European governments, the European Central Bank and the International Monetary Fund to ensure the numbers add up, he said.
European stock markets and Greek assets surged on Monday on hopes of a last-minute deal to ease a crisis that is threatening to drive Greece out of the euro and weaken the foundations of the European Union's single currency.
"I am convinced that we will come to a final agreement in the course of this week," European Commission President Jean-Claude Juncker told a late-night news conference.
German Chancellor Angela Merkel, whose country is Greece's biggest creditor, was more cautious. "I can't give any guarantee that that will happen," she said of a final agreement. "There's still a lot of work to be done."
The Greek proposals included higher taxes and welfare charges and steps to curtail early retirement, but not the nominal pension and wage cuts first sought by lenders. Leftist Prime Minister Alexis Tsipras, elected in January on a promise to end austerity measures, also appeared to have avoided raising value added tax on electricity or loosening job protection laws.
Tsipras said the ball was back in the creditors' court and they should provide a deal that would make Greece's huge debts affordable. "We are seeking a comprehensive and viable solution that will be followed by a strong growth package and at the same time render the Greek economy viable," he told reporters.
The detail of the proposals will now be assessed by experts from the three creditors institutions, the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF).
EU Council president Donald Tusk said he hoped "that the Eurogroup can achieve results on Wednesday evening that can be presented Thursday morning" before the EU summit on Thursday evening.