By Angeliki Koutantou and Renee Maltezou
ATHENS (Reuters) - Prime Minister Alexis Tsipras appealed to parliament to back a tough reform package to try to save Greece from financial collapse, with European Union and IMF officials offering a positive early assessment of the measures.
The creditors are due to give an initial verdict on reform proposals and a request from Athens for billions of euros in new funds within hours. Euro zone partners appeared to be preparing for a deal to keep Greece in the euro zone.
One euro zone source, who is familiar with discussions among Eurogroup ministers and has been sceptical of Greece's ability to carry out a new reform programme, said early on Saturday that it was now "100 percent sure" that ministers would agree to launch negotiations on a third bailout later in the day.
Speaking in parliament, where many leftists in his own party were stunned by his acceptance of previously spurned austerity measures, Tsipras admitted the proposals were "difficult". But he urged lawmakers to help Greece stay with the euro.
"We are asked to take difficult decisions, we will stand up to this responsibility, and we will meet it," Tsipras said in a speech seeking the backing of lawmakers for the package. "We will meet it, not only to stay in Europe but to stay as an equal partner," he said.
Experts from the European Commission, European Central Bank and the International Monetary Fund spent Friday reviewing the Greek case for aid and the proposals for economic reforms that will be conditions for any loans.
The positive evaluation, along with a conclusion that Athens needs a total of some 74 billion euros (53 billion pounds) to meet its obligations, will form a key part of discussions among euro zone finance ministers when they meet in Brussels at 3 p.m. (1400 BST).
With the centrist To Potami party and the centre-right New Democracy opposition parties promising to vote with the government, the proposal is expected to pass easily.
The leader of the junior coalition party in Tsipras' government said his lawmakers would back the proposals "with a heavy heart."
However, even if the measure appears certain to clear the parliamentary vote in Athens, deep unease in the Syriza ranks could leave Tsipras with no majority of his own and raise questions over how long his government may last.
The latest reform package was strikingly similar to the terms Greeks rejected in a referendum just last Sunday, angering members of the Syriza's hardline Left Platform wing. Five of them signed a letter saying it would be better to return to the drachma, Greece's pre-euro currency, than to swallow more austerity with no debt write-off.
"The proposals are not compatible with the Syriza programme," Energy Minister Panagiotis Lafazanis, who belongs to the far-left faction, told Reuters.
He declined to say how he would vote in the plenary ballot expected early on Saturday morning. "We will take it step by step."
Underlining the unhappiness of many on the left at the government's apparent embrace of austerity, a few thousand demonstrators gathered in front of parliament before the vote to protest against the measures.
"SERIOUS AND CREDIBLE"
Germany, which has contributed more to bailouts than any other country, sounded wary. A finance ministry spokesman ruled out any debt restructuring that would lower its real value.
France, Greece's strongest supporter in the euro zone, rushed to offer praise. President Francois Hollande called the offer "serious and credible". Eurogroup head Jeroen Dijsselbloem described it as a "thorough piece of text" but declined to go into specifics.
"Broad support in Greece gives it more credibility, but even then we need to consider carefully whether the proposal is good and if the numbers add up," he told reporters. "One way or the other, it is a very major decision we need to take."
The lenders' backing is crucial for euro zone leaders to support the proposals. Dijsselbloem, European Commission President Jean-Claude Juncker, European Central Bank President Mario Draghi and International Monetary Fund head Christine Lagarde discussed the plan in a teleconference.
The euro gained more than 1 percent against the dollar and European markets rallied on the improved prospects for a last-ditch deal to keep Greece in the currency area. Italian, Spanish and Portuguese bond yields fell, reflecting perceptions of reduced risk.
U.S. Treasury Secretary Jack Lew said Greece and its creditors appeared to be closer to a deal, calling for an adjustment to Athens' debt burden to ease its cash flow.
Greece still has to overcome hardening attitudes towards it among euro zone partners.
Some, including a senior member of German Chancellor Angela Merkel's party, greeted the latest reform proposals with scepticism. Slovakia's finance minister questioned whether the proposals went far enough.
A senior EU official said the meeting of finance ministers from the 19-nation euro area would include discussions on whether Greece needs some debt relief on a third bailout programme despite exasperation at the five-year-old Greek crisis.
Greece asked for 53.5 billion euros ($59 billion) to help cover its debts until 2018, a review of primary surplus targets in the light of the sharp deterioration of its economy, and a "reprofiling" of the country's long-term debt.
Any new deal would also have to be endorsed by national parliaments including in Germany.
Estonia's parliament was the first to give the government conditional authorisation for loan negotiations with Greece, provided the Commission finds sufficient basis for the talks.
But Lithuanian President Dalia Grybauskaite, whose country is the most recent newcomer to the euro, said the Greek proposal was based on old economic data and would probably not be enough.
Several protests against the package took place on Friday. "The new measures are suffocating," said Irini Skordara, 79, one of dozens of pensioners queuing outside a bank to withdraw their pension.
"RIGHT CHOICE"
Former Finance Minister Yanis Varoufakis, who alienated many euro zone partners with his outspoken lectures, said in a statement he supported the effort to renegotiate Greece's debt but was unable to attend parliament "for family reasons".
The latest offer includes defence spending cuts, a timetable for privatising state assets such as Piraeus port and regional airports, hikes in value added tax for hotels and restaurants and slashing a top-up payment for poorer pensioners.
"The 'No' in the referendum appears to be turning into a 'Yes' from Tsipras," Commerzbank analyst Markus Koch said.
Greek banks have been closed since June 29, when capital controls were imposed and cash withdrawals rationed after the collapse of previous bailout talks. Greece defaulted on an IMF loan repayment and now faces a critical July 20 bond redemption to the ECB, which it cannot make without aid.
The country has had two bailouts worth 240 billion euros from the euro zone and the IMF since 2010, but its economy has shrunk by a quarter, unemployment is at more than 25 percent and one in two young people is out of work.
"The prime minister seems to have made the right choice between his party and the interest of Greece," an editorial in the centre-right daily Kathimerini said.
"His decision to accept a tough package of measures will ensure the country stays in the euro. This is not the time for gripes and assessing the damage, what's most important is securing the country's interests and its place in the euro zone."
($1 = 0.8960 euros)
(Reporting by Michele Kambas, George Georgiopoulos, Costas Pitas, Lefteris Karagiannopoulos, Marius Zaharia, Alastair Macdonald, Caroline Copley, Georgia Kalovyrna, Anthony Deutsch, Toby Sterling, Julien Ponthus, Jan Strupczewski; Writing by Matthias Williams and James Mackenzie; Editing by Anna Willard, Philippa Fletcher and Ken Wills)
