Greece Debt, Europe Debt | featured news

Greece must surrender control of its budget policy to outside institutions if it cannot implement reforms attached to euro zone rescue measures, the German economy minister was quoted as saying on Sunday.

Greece and its private creditors said on Saturday they were piecing together the final elements of a debt swap and expected to have a deal ready next week, essential for sealing a new bailout and avoiding an uncontrolled default.

Greek officials reject German proposals for a eurozone budget commissioner to oversee spending, as agreement nears on a second bailout for Greece.

Greece and its bondholders have made little progress since resuming stalled talks on a debt swap, three sources close to the talks told Reuters on Thursday, with time to strike a deal and avoid a messy default running out rapidly.

Greece could reach a bond swap deal with private creditors to reduce its debt load by the end of next week, with a formal offer possible by early February, a finance ministry source said on Thursday.

European Central Bank policymaker Athanasios Orphanides called for euro zone leaders to abandon plans to make private sector investors help reduce Greece's debts, but his push showed no sign of gaining any traction in Europe's capitals on Friday.

Greece faces another tough year in 2012 but must stick to its program of austerity and reform to stay in the euro, Prime Minister Lucas Papademos said in a pre-recorded New Year's Eve address.

Economist Lucas Papademos will be Greece’s next prime minister, the Greek president’s office announced Thursday, giving to a non-politician the job of passing an unpopular bailout plan before elections are held next year.

Greek PM George Papandreou says an agreement has been reached on the creation of an interim government that will secure the new debt deal.

Greece's embattled prime minister and main opposition leader agreed Sunday to form an interim government to ensure the country's new European debt deal and oversee early elections, capping a week of political turmoil that saw Greece facing a catastrophic default and threatening its euro membership.