Greek source says eurozone plan `very bad,` but no time for delay

Eurozone finance ministers have proposed "very bad" terms for a new bailout for Greece but Athens cannot afford any delay in launching negotiations over the package, a Greek government source said Sunday.

"The text in its entirety is very bad. We are trying to find solutions," said the source, adding negotiations had to begin swiftly as Greece was running out of cash.

The left-wing Greek government of Prime Minister Alexis Tsipras last month rejected austerity measures demanded by creditors in return for fresh funding.

The creditors -- the European Union (EU), European Central Bank (ECB) and International Monetary Fund (IMF) -- pulled the plug on the rescue scheme, forcing Athens to adopt capital controls and close the banks to try to keep the country solvent.

The ECB has been keeping the Greek banks afloat with emergency funding but recently tightened conditions.

Eurozone finance ministers on Saturday said Greece would now have to push through new laws by as early as Wednesday if it even wanted to talk about another bailout programme, estimated at up to 86 billion euros ($95.4 billion).

These laws would include reform of labour rules and pensions, VAT and taxes, and measures on privatisation.

The ministers even proposed a temporary Greek exit from the euro, a move first floated by Germany.

"In case no agreement could be reached, Greece should be offered swift negotiations on a time-out from the euro area, with possible debt restructuring," said the document obtained by AFP.

The 19 eurozone leaders were meeting late Sunday in an effort to thrash out a final document based on the ministers` recommendations.

Large parts of the text, including the `Grexit` option were in brackets, meaning they were still to be agreed.

The Greek government source, who asked not to be named, said a major concern for Athens was IMF involvement in what would be a third debt rescue.

Germany, which insists Greece first meet the tough demands before it will even consider another bailout, wants the IMF involved so as to tighten up the programme, the source said.

The source added that Tsipras and German Chancellor Angela Merkel had also had a "sharp exchange" over his calls for the creditors to cut Greece`s massive debt mountain so as to give the struggling economy some breathing room.

Merkel has repeatedly made clear she is totally opposed to any such debt "haircut".