Greece has been asked to sanction major tough reforms by Wednesday in return for crucial funding to stave off financial collapse.

Failing that, the leaders of the EU members states using the common European currency agreed that Greece would be temporarily elbowed out of the eurozone until it gets its house in order.

By the time of going to print at 11pm, and after 13 hours of talks, Greece’s leaders were still engaged in talks with other eurozone heads of State and of government as well as with creditors.

As political fault lines were very evident in Brussels yesterday, French President Francois Hollande warned that losing Greece from the eurozone would mean starting the dangerous unravelling of EU integration.

It was the climax of dramatic negotiations that took place just a week after the Greeks overwhelmingly voted against austerity measures, which they are now being forced to implement in return for a third bailout.

If we’re stuck, the alternative would be to negotiate a timeout

To remain afloat, Greece needs €82-86 billion, €7 billion of which by July 20 and another €5 billion by mid-August. It needs a further €10 billion to capitalise its banks. Banks have been closed for two weeks and a €60 daily limit on cash machine withdrawals, imposed on June 28, remains in force for Greek citizens.

Speaking to reporters on the sidelines of an emergency meeting, Finance Minister Edward Scicluna said: “The Greek government is realising the catastrophic implications of not getting immediate funding.”

According to a draft report, leaders agreed that no assistance would be provided to Greece unless it abides by certain commitments involving tough reforms on the labour market, pensions and taxes.

Greece is also being asked to hand over €50 billion of State assets, a move which elicited loud protests in Athens last night.

Successful legislation would trigger a meeting of the eurogroup, possibly by Thursday, to agree on a mandate allowing the European Stability Mechanism to start negotiations on a memorandum of understanding with Greece.

Leaders agreed there should be no haircuts to debts but the extension of debt repayments is being discussed.

Prof. Scicluna did not mince his words when asked whether there was a Plan B should Greece reject the proposals.

“If we’re stuck, the alternative would be to negotiate a timeout – a temporary exit from the euro. It is no longer taboo.”

Prof. Scicluna said Greece’s dire situation came even more to light in the last few days when it was known that debt was climbing to a whopping 200 per cent of GDP, “and that was the best possible scenario”.

He agreed that the Greeks were now facing a bizarre contradiction that they will have to implement the measures they voted against.

“Everybody was sceptical about the statements made by Greece. Would it lead to more lending? Unless we rebuild trust there’s nothing,” Prof. Scicluna said.

Arriving at the summit, Prime Minister Joseph Muscat said he wanted Greece to remain in the eurozone but not at all costs. He said the situation in Greece over the past few days had deteriorated in a “tragic” manner.

What the creditors have demanded

1. Streamline VAT.

2. Broaden tax base.

3. Carry out major pension reform by October 15.

4. Adopt a code of civil procedure.

5. Reform justice and administration.

6. Introduce labour market reforms.

7. Safeguard independence of statistics authorities.

8. Fully implement spending cuts.

9. Improve overall governance.

10. Apply a single rulebook for the resolution of banks and large investment firms, as prescribed by the Bank Recovery and Resolution Directive.

11. Carry out ambitious market reform and liberalisation.

12. Liberalise the electricity sector.

13. Introduce collective bargaining, including collective dismissals.

14. Strengthen banks by inspec­ting non-performing loans.

15. Scale up privatisation programme.

16. Overhaul public administration.