Greek gov't refutes media reports over IOUs for pensions, salaries

The Greek government on Wednesday dismissed as "absolutely fictitious" media reports that payments of pensions and salaries of civil servants will be made through IOUs in the coming weeks.

"Such reports harm the interests of the country and are dangerous in a period when negotiations with lenders are at a crucial crossroad," a statement from the Greek finance ministry said, referring to the latest report printed in a local daily.

Reports saying that the Greek leftist government has been preparing for the Greek exit from the eurozone, or "Grexit," and the use of a parallel currency have increased after the six-month talks with creditors over a reform-for-cash deal hit a deadlock.

After the emergency eurozone summit in Brussels, Greek Prime Minister Alexis Tsipras appeared confident that a deal could be sealed by the upcoming weekend.

For the first time so far, European leaders have given Athens a clear ultimatum. The government must present credible proposals and strike an agreement by the end of this week, otherwise the Grexit will be on the table during the extraordinary EU summit scheduled for this upcoming Sunday.

The Greek government was given 48 hours to submit a formal request for the country's further financing through the European Stability Mechanism (ESM) over the next two years and a comprehensive list of planned reforms and fiscal adjustment measures to all institutions that could be the basis of the next bailout program.

In the best case scenario that the two sides agree on the framework of their future cooperation, given that procedures for the release of funds from the ESM are time-consuming, according to Greek government sources, Greece will pledge to swiftly implement the first round of policies.

In return, the country will receive some financing to cover immediate financial obligations to the European Central Bank (ECB) and the International Monetary Fund (IMF) this summer.

Since July 1, Greece has been in arrears to the IMF after failing to repay a loan installment and on July 20, Greece needs to repay a loan worth 3.5 billion euros to the ECB.

According to government sources, Greece will request an aid program worth more than 30 billion euros from the ESM that will include a support program for the banking sector that is crumbling despite the bank holiday and the capital controls introduced on June 29.

According to the same sources, despite the resounding "No" of Greek voters to the creditors' June 25 offer for a deal in last Sunday's referendum, Athens was ready for more concessions to stave off a default and Grexit. Endi