Greece expects to conclude difficult debt talks with private creditors within days and negotiations with the EU and the IMF on a new bailout deal by the middle of next week, Prime Minister Lucas Papademos told Reuters on Friday.
Speaking at his neo-classical office shortly before resuming talks with bankers on a bond swap deal that is key to saving the euro zone member from bankruptcy, Papademos said: Greece will not default.
We made significant progress over the last few weeks and in the last few days in particular. We are trying to conclude the discussions as quickly as possible. I am quite optimistic an agreement will be reached in the coming days, Papademos said.
The prime minister, who leads an emergency coalition government tasked with steering Greece out of its worst economic crisis in decades, spoke to Reuters minutes before bankers' chief negotiator Charles Dallara swept up to his mansion in his limousine for a new round of talks.
Papademos was also upbeat about parallel negotiations with the so-called troika of the European Union, International Monetary Fund and European Central Bank, saying agreement was expected soon on the reforms they are demanding in exchange for a new 130-billion euro aid package Greece needs to stay afloat.
The aim is to complete the discussion with the troika by the middle of next week at the latest. I hope sooner rather than later, he said.
The former central banker said Greece had made progress on both fiscal and structural reforms with results already emerging.
Much more has been achieved than sometimes appears in public. There are some slippages in the implementation of the fiscal adjustment programme and the reforms. But internal devaluation is already taking place. We expect some modest growth to appear during 2013.
Papademos said the budget deficit would be about 9.5 percent of GDP in 2011, from 10.6 percent in 2010. A worse than expected recession has made it hard for Greece to meet targets agreed with lenders, despite harsh salary cuts and tax hikes.
The troika has criticised the slow pace of Greek reforms and privatisations. Lenders have warned the second bailout will hinge on Greece's proven commitment to the programme.
The soft-spoken economist, whose polite demeanour was a sharp contrast to the brash style of many Greek politicians, said he appreciated the sacrifices the population was making.
We fully understand that the Greek people are not happy with current economic conditions and are concerned about the prospects for the economy, he said.
I believe the majority of the Greek people recognise the need for addressing our fiscal problems. I believe they realise that other adjustments are necessary in order to restore conditions for sustained growth.
Scores of riot police cordoned off streets around his office during the interview, as hundreds of leftist protesters waved fists at parliament, chanting IMF get out.
The demonstration was smaller than previous, often violent, protests against the previous socialist government of George Papandreou, who was forced to step down in November.
Papademos's coalition is supported by the three main parties in parliament, ranging from socialists to the far-right, who have agreed an uneasy truce for a few months to save Greece from
default and exit from the euro zone.
Asked why he left a tranquil academic career for the Herculean task of leading Greece at such a difficult time, Papademos said: I had to contribute to the country's efforts to overcome the crisis.
Did he have any regrets? Once you make the decision, you don't look back, he replied with a wry smile.
(Editing by Barry Moody and David Stamp)