European finance ministers discussed Greece's debt difficulties on Friday but said Athens was for now seeking to remove any obstacles to the rollout of emergency aid if needed, rather than requesting it officially.

As they did so, Greek Prime Minister George Papandreou told parliament his government was imposing a painful austerity plan to prevent the country sinking and that any request to activate the outside aid would be based on the country's interest.

Euro zone finance ministers announced last Sunday that they had agreed an emergency loan facility Greece could tap if needed and that the International Monetary Fund could chip in to what would be the first-ever rescue of a euro currency country.

As it struggles to refinance a debt bigger than its economic output, Greece moved closer to activating that aid when it said on Thursday it was seeking talks with European authorities and the IMF, which will send teams to the country on Monday.

It is a matter of preparing a joint program of conditionality and financing if needed and if requested, European Monetary Affairs Commissioner Olli Rehn said.

He was attending a string of meetings of European finance ministers and central bankers in Madrid, where Greece was due to review latest developments with its European peers.

There are no indications that Greece will ask for help today, said Jean-Claude Juncker, Luxembourg prime minister and chairman of the first meeting in Madrid on Friday, involving ministers from the 16 euro currency countries and Jean-Claude Trichet, head of the European Central Bank.

Financial markets, where Athens needs to roll over some 53 billion euros ($74.1 billion) of sovereign debt this year with a big chunk before May 19, remained nervous, with Greek 10-year bond yields rising to 7.3 percent on Friday.

That pushed the 10-year Greek/German government bond yield spread -- the premium investors demand to hold that debt over what they require to buy safer German debt -- to 425 basis points from 415 basis points at Thursday's settlement, Tradeweb data showed.

In a letter to the European Union, the European Central Bank and the IMF released to the media on Thursday, Greek Finance Minister George Papaconstantinou proposed discussions on a multi-year program of economic policies.

He said this could be supported with financial assistance from the euro-area member states and the IMF, if the Greek authorities were to decide to request such assistance.

German Finance Minister Wolfgang Schaeuble, who stayed away from the Madrid talks, said in an interview on German radio he still hoped Greece stood a chance of pulling through without help.

We still believe that the Greeks are headed in the right direction, and that in the end, they will not need to demand the aid at all, perhaps, he said, according to a transcript of the interview with Germany's Suedwestrundfunk.

Essentially, Greece and its potential rescuers are trying to make sure everything is in place for if and when emergency help has to be rolled out.

Spanish Economy Minister Elena Salgado said it remained to be seen whether that would happen but that Athens was taking the necessary precautions.

Greece has been in the first steps but it's up to them to continue, said Salgado, whose country was hosting the meeting in Madrid on Friday and Saturday because it holds the rotating presidency of the European Union at the moment.

(Additional reporting Nigel Davies, Paul Carrel, Gavin Jones, Krista Hughes, Jan Strupczewski in Madrid; Writing by Brian Love; Editing by Dale Hudson)