ATHENS: Greece headed Wednesday into fresh talks with private creditors that could boost the beleaguered eurozone just as powerhouse Germany announced a sharp cut to its 2012 growth forecast.
A Greek finance ministry source told AFP that Athens "expected a positive result by this weekend at the latest."
The source did not rule out an accord "even by this evening" after Charles Dallara, head of the Institute of International Finance, and other creditors met with Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos.
Papademos said in an interview published Wednesday that "taking into account the complexity of the exercise, I would say that we are very close to reaching an agreement."
The talks are aimed at cutting Greece's debt with private creditors by about 100 billion euros ($128 billion), and would go a long way towards reducing the nation's staggering total debt of more than 350 billion.
Negotiations hit an impasse on Friday over the terms of new bonds that would replace those being written-down.
The head of Greece's parliament voiced optimism meanwhile that auditors from bailout partners in the EU and International Monetary Fund would welcome reform efforts in Greece, while Papademos pointed to possible early elections "sometime in April."
The IMF and Germany reportedly intervened last week to seek better terms from the banks for Greece, where a slew of austerity measures have slammed an economy in recession and sparked violent protests.
On Tuesday, an IIF statement "encouraged all parties to work in good faith toward this end with a sense of urgency."
In March, Greece could become the first developed economy in 60 years to default on its debt if it does not hammer out a deal with private creditors, clearing the way then for a second bailout by the EU and IMF.
The EU and IMF have made it clear that an agreement between Athens and the banks is crucial to approval of that second package which is worth 130 billion euros on top of 110 billion euros already pledged in 2010.
A credible deal is also key to making progress on the overall eurozone debt crisis, which has weighed on sentiment in global financial markets.
In Germany, Europe's biggest economy, the government slashed its 2012 growth forecast on Wednesday to a paltry 0.7 percent from its previous estimate of 1.0 percent.
Economy Minister Philipp Roesler stressed however that business activity would continue to expand despite the crisis and there would be no recession.
"After two extraordinarily strong growth years, the German economy is still in robust form. However, due to a difficult external environment, we are expecting a temporary dip in growth in the first half of the year," he said.
Roesler forecast a 2013 rebound, with growth of 1.6 percent.
Greek parliamentary president Filippos Petsalnikos expressed hope in a German public radio interview Wednesday that EU and IMF auditors, plus European Central Bank officials, would give a positive review of the country's reforms.
"I am optimistic ... We hope the troika shows understanding, above all," he told Deutschlandfunk radio, referring to officials from three bodies.
"The reforms continue in our country and we must do everything in a very short time," Petsalnikos said.
Papademos told the New York Times in an interview that Greece could hold early elections in April after his caretaker government completed the talks.
"I would say the baseline scenario is for elections to be held sometime in April," said Papademos, who came to power in November at the head of a technocrat government with a mandate to conclude the second bailout talks.
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