Greece said on Thursday it had found extra budget savings demanded by its international lenders, suggesting a new rescue package is within reach even though acrimony simmered between Athens and its European partners.
Greece is scrambling to clinch the 130 billion euro ($170 billion) bailout at a meeting of euro zone finance ministers on Monday to avert a chaotic default when 14.5 billion euros in debt repayments fall due on March 20.
Euro zone paymaster Germany indicated that a proposal to stagger the bailout and withhold part until after a Greek election in April was no longer on the table.
But a source in the German ruling coalition, speaking after talks with the German finance ministry, said some outstanding issues remained, including the possibility of an ring-fenced account for debt redemption payments and better controls of Greece's efforts to reduce spending.
Athens is coming up against rising frustration among some euro zone members at what they see as a trend of Greek political leaders doing the minimum possible at the last possible moment since the country was first bailed out in 2010.
Critics say the same applies to the euro zone's crisis response over the last two years.
Greek government sources said Athens had agreed with the EU and IMF how to fill the 325 million euro hole in a set of 3.3 billion euros in budget cuts adopted on Monday as rioters torched and looted buildings in the capital.
Two sources said 100 million euros would come from defense cuts, about 90 million by bringing forward some public sector wage reductions and another 135 million would be taken from the health, labor and interior ministries.
European shares recovered losses and safe haven German Bunds hit session lows in response.
The latest bout in the grueling debt crisis is straining relations between Athens and its euro zone partners to breaking point.
Faced with calls for greater scrutiny of Greece's implementation of the deal, one Greek cabinet member lashed out on Thursday, accusing the EU of sheer blackmail.
Any other intervention, any new demands by our lenders, will mean they are mocking the country, Public Order Minister and former EU commissioner Christos Papoutsis said, echoing an angry outburst by Greece's octogenarian president over German suggestions the country could go bankrupt.
Some in Europe forget that behind the numbers are people, Papoutsis said. Union leaders called for a new protest rally on Sunday to answer all those who want Greece under German occupation.
Analysts say the currency bloc will be in better shape to contain any contagion from a chaotic Greek default in the second half of the year when a more robust rescue fund is due to have been established.
Earlier in the day, policymakers were still talking about delaying the bailout, or holding some back, after EU sources told Reuters euro zone officials were studying the option of in order to retain some leverage over Athens, while still avoiding a disorderly default.
Confidence has indeed sunk to a low point, Dutch Finance Minister Jan Kees De Jager told Dutch paper Het Financieele Dagblad. Therefore it has been suggested to wait until after the elections because then you can make the commitment with the new government.
A Finnish official, who declined to be named, said: Only part would be provided (initially) so we can avoid default. Later, post-election, maybe we (would) deliver fuller payment.
But Berlin appeared to have put paid to that idea and an EU source said the proposal had only been mooted as a suggestion and had not won wide support during a conference call of euro zone finance ministers on Wednesday.
A German coalition source, speaking after talks with the German finance ministry, said proposals to provide Greece with bridge financing to cover its immediate debt obligations while withholding the rest of the aid package until after elections expected in April were no longer being considered.
Frustration exploded on Wednesday as Greek President Karolos Papoulias, an 82-year-old veteran of the resistance to Nazi occupation of Greece during World War Two, lashed out at German Finance Minister Wolfgang Schaeuble.
Schaeuble, who has likened Greece to a a bottomless pit, expressed doubt on Wednesday whether Athens would stick to new promises adopted by parliament on Monday as rioters torched and looted buildings across the capital.
I cannot accept Mr Schaeuble insulting my country, Papoulias riposted. Who is Mr Schaeuble to insult Greece? Who are the Dutch? Who are the Finnish?
Schaeuble Junta, ran a headline in the conservative Eleftheros Typos newspaper, harking back to Greece's painful spell under military rule during the 1960s and 1970s.
Euro zone crisis in graphics http://r.reuters.com/hyb65p
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After the three-hour conference call among the 17 euro zone ministers, Eurogroup chairman Jean-Claude Juncker said progress had been made but made clear some matters remained open on making sure the bailout plan is carried out in full.
Further considerations are necessary regarding the specific mechanisms to strengthen the surveillance of program implementation and to ensure that priority is given to debt servicing, he said.
Juncker predicted things would fall into place by Monday although any number have deadlines have been set, only to be missed.
Greek conservative leader Antonis Samaras - tipped to become prime minister after a possible vote in April - gave a written pledge on Wednesday to stick to the austerity package, meeting another EU demand, but added that policy modifications might be required to boost growth.
A new survey by the VPRC polling company showed Samaras' New Democracy party getting 27.5 percent support, down from its 30.5 percent score in January, but still well ahead of the newly-founded Democratic Left party in second with 16 percent.
Private and public sector unions representing about 2 million workers, or half the country's workforce, called for a new rally against the austerity measures for Sunday.
We have only one demand now - elections, Nikos Kioutsoukis, general secretary of the country's largest private sector union GSEE, told Reuters.
(Additional reporting by George Georgiopoulos and Karolina Tagaris in Athens, and by Brussels, Berlin and Amsterdam bureaus; Writing by Mark John and Matt Robinson, editing by Mike Peacock)