The European Union and IMF want Greece to push through more budget cuts and implement a series of long-agreed austerity reforms before they sign off on a new bailout the country needs to avert bankruptcy, a report obtained by Reuters shows.

All eyes have been on Athens' tortuous debt exchange talks with its private creditors in recent weeks and a preliminary deal could be wrapped up by Sunday evening, a Greek government official said on condition of anonymity.

We are one step away from completing the PSI (debt swap) deal, Finance Minister Evangelos Venizelos said, adding that the country would announce the public offer to its bondholders by February 15.

EU economic and monetary affairs chief Olli Rehn also sounded optimistic on the odds of a deal soon, saying an agreement was very close and might be clinched as soon as this weekend.

The head of a panel of German government economic advisers joined a growing chorus of voices calling for the European Central Bank to facilitate a bond swap to lower Athens' debts by forgoing profits on its Greek bonds.

With or without a deal with private creditors, Greece must convince its euro zone partners and the International Monetary Fund that it is doing enough to implement reforms they require in return for a 130 billion euro bailout package it needs to avert a chaotic default.

To do so, Greece will have to make extra spending cuts worth 1 percent of GDP - or just above 2 billion euros - this year, according to a preliminary estimate drawn up by the EU and the IMF in the document outlining the reforms Athens should enact.

Venizelos acknowledged talks with the troika on the bailout were tough and that Greece was in difficult position because it had lost credibility abroad.

Greece has not only to commit itself, Greece has to deliver. Not all of the commitments have been fulfilled. That is one of the critical issues to confidence, German Finance Minister Wolfgang Schaeuble said at the annual World Economic Forum in Davos.

Also in Davos, U.S. Treasury Secretary Timothy Geithner pressed the euro zone to boost its bailout fund resources to allow it to shield larger economies such as Italy and Spain.

Our view is that the only way Europe is going to be successful in holding this together is for them to bring a stronger firewall and that is going to demand a bigger commitment, Geithner told the Forum.

Athens' partners have grown increasingly exasperated with its repeated fiscal slippages and delays on reforms and want to see progress before they wrap up Greece's second multi-billion euro bailout in three years.

Looming elections which could take place as early as April are distracting politicians and senior officials from enacting the unpopular austerity reforms, sources close to the talks say.

Greece's partners are worried about whether a new government would stick to reforms and Schaeuble has said all parties must commit to the reforms, no matter who wins the election.

That might prove to be complicated. Antonis Samaras, whose party leads in opinion polls and is part of the coalition government, opposes any new austerity measures, saying they risk plunging Greece even further into crisis. He wants elections by April 8 at the latest.

Far-right leader George Karatzaferis, whose party also belongs to the coalition government, said on Friday that Greece's lenders should not push the country too far, particularly by asking all of its party leaders to commit in writing to excessive demands.

No-one should expect a signature of subservience, Karatzaferis said in parliament. Yes, we assume our obligations but we will not bow to ultimate disgrace.


Top of the list of measures demanded by the EU, IMF and ECB in return for aid is passing a supplementary budget with more cuts to reach fiscal targets in 2012. The troika suggests large spending cuts in defense and health spending as well as cutting redundant state entities.

The EU and IMF are pressing Greece to adopt a much-delayed reform of supplementary pensions, ensure that a plan to replace only one out of five civil servants leaving the workforce is enacted and want Greece to finalize the opening up of its many closed professions such as lawyers and pharmacists, which they have been demanding for years, the document shows.

They also want the Bank of Greece to complete its assessment of Greek banks' capital shortfall and they expect the government to enact legislation to improve wage flexibility and further liberalize product and service markets, the document says.

The list of measures is not final and could change after discussions with the Greek authorities, the document says. Top EU, IMF and ECB inspectors are in Athens to discuss this, with talks on the new program expected to go well into next week.

Government spokesman Pantelis Kapsis said the government would try to negotiate on some of the points on the list but repeated that Athens needed the bailout loan to stay afloat.

Asked if Greece would default without the aid, he told Skai TV: It's obvious, if we don't get the loan, how are we going to find the money?

Greece's fiscal derailment was plain to see in budget data published on Friday by the country's statistics agency ELSTAT.

The general government deficit, the key benchmark for fiscal targets, reached 17.14 billion euros for the first nine months of the year, ELSTAT said - already just exceeding an initial 17.1 billion euro target for the full year.

The IMF has warned that worsening recession means European governments or banks need to put more into the rescue effort.

The emerging private sector bond swap deal seems set to leave a funding gap of 12-15 billion euros to bring Greece's debt down to a level of 120 percent of annual output regarded by the IMF as sustainable, EU officials say.


Greece and its private creditors made progress on Thursday in talks on restructuring its debt and Charles Dallara, the top negotiator for private creditors, began the latest round of talks with Greek Prime Minister Lucas Papademos on Friday evening.

We are very close to a deal, if not today then over the weekend and preferably in January, not February. We are very close, Rehn told the World Economic Forum in Davos.

The euro strengthened against the dollar and safe haven German bond futures fell back after Rehn's comments. Italy's six-month borrowing costs fell below 2 percent at an auction in another sign of easing bond market tensions.

Deutsche Bank Chief Executive Josef Ackermann confirmed that private creditors have offered to take losses of almost 70 percent in the debt swap.

After weeks of wrangling over the coupon, or interest rate, Greece must pay on the new bonds it will swap for existing debt, attention has shifted to whether the European Central Bank and other public creditors have to make a contribution too.

ECB board member Joerg Asmussen rejected the call for the central bank to take part in the so-called PSI deal being negotiated with private creditors.

As you know, the abbreviation stands for private sector involvement. The ECB and the euro system are clearly not private, Asmussen told Reuters.

(Additional reporting by Harry Papachristou in Athens, Paul Taylor in Davos, Andreas Framke in Frankfurt and Annika Breidthardt in Brussels, writing by Ingrid Melander)