AFP

ATHENS GREECE “is close” to a critical debt writedown with private creditors, its prime minister said on Monday, before adding that abandoning the euro was “not an option” for the crisis-hit eurozone member.

“The discussions which are ongoing have I think helped us to reach a point, which is close to an agreement, but some further reflection is necessary on how to put all the elements together,” Lucas Papademos told CNBC television.

He spoke three days after a group representing creditor banks said it had “paused” in its debt talks with Greece.

“There is a little pause in these discussions. But I’m confident that they will continue and we will reach an agreement that is mutually acceptable in time,” Papademos said in his first interview since taking office in November.

The proposed deal would see banks agree to a 50 percent reduction, or “haircut” on their Greek debt, which would cut about 100 billion euros ($127 billion) from Athens’ massive debt burden that currently exceeds 350 billion.

Failure to reach agreement on the debt writedown, which is a condition for new eurozone loans for Greece, has raised the prospect of a disorderly default that would plunge the 17-nation eurozone even deeper into crisis.

Athens is conducting a separate negotiation with the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) on details of a rescue package worth 130 billion euros that was decided in October.

The country faces debt repayments worth more than 14 billion euros in March that it cannot meet without financial assistance.

“The two processes will have, this is the aim, to be completed over the next two to three weeks,” Papademos noted.

The PM, a former ECB vice president, said the crisis- hit eurozone nation stood a much better chance of enacting tough reforms necessary for its economic recovery under the protection of the single currency.

“I think it’s often discussed that leaving the euro is an option for Greece. I think this is really not an option,” Lucas Papademos told CNBC.

Officials from the EU Commission, ECB and IMF, known collectively as the ‘troika’, are due back in Athens later this week to assess Greece’s efforts in reducing its deficit and launching structural reforms.

Greece has already used up two-thirds of an initial 110-billion-euro rescue package it secured from the EU and IMF in May 2010.