Greece seeks 2-year debt deal

The Greek government proposed on Tuesday a two-year agreement with the ESM to fully cover its financial needs and a parallel debt restructuring, after it declined to pay the IMF loan installment.

Athens: Greece's government proposed a two-year debt deal with the European Stability Mechanism (ESM) in a last-minute bid to avert the countdown to default and a possible Grexit, Greek Prime Minister Alexis Tsipras' office said on Tuesday.

According to government sources, at the same time Tsipras was ready to travel to Brussels even later on Tuesday to discuss the proposal with European partners, Xinhua reported.

"The Greek government proposed on Tuesday a two-year agreement with the ESM to fully cover its financial needs, and a parallel debt restructuring," the e-mailed announcement said.

"The Greek government will seek until the end a viable solution within the eurozone. This is the message of 'No' to a bad draft deal proposal on Sunday," the statement added.

The Greek government stressed that the decision to call on Saturday a referendum for July 5 on the draft agreement lenders made last week "was not the end of negotiations." The messages from European leaders on the interpretation of the referendum's outcome varied. Greece remains at the negotiating table, concluded the statement. It was issued just a few hours before the extended Greek bailout expires on Tuesday midnight amid increased concern over a looming default and possible Grexit.

Earlier on Tuesday, Finance Minister Yanis Varoufakis said Greece will not repay the loan instalment due to the International Monetary Fund (IMF) on Tuesday, even as the country mulled taking legal actions to block its exit from the eurozone.

However, Varoufakis expressed hope that a debt deal can be reached with international creditors, Xinhua news agency reported.

Greece's failure to meet its financial obligations to the IMF for a second time in a month and pay off 1.5 billion euros ($1.7) in loan instalment could launch formal procedures for default in coming weeks.

Varoufakis made remarks amid media reports that in the past few hours Greece's dialogue with international creditors has resumed to achieve a last-minute debt deal and avert a financial collapse and possible exit from eurozone. According to an earlier report, Athens is said to have received a message from European Commission President Jean-Claude Juncker on Monday night to accept the creditors' draft.