'EU will not control Greece budget'
Greek Prime Minister Lucas Papademos (left) speaks with German Chancellor Angela Merkel
Greece is going to reject a German plan that asks Athens to cede control of its budget to the European Union in return for a second bailout, government officials say.
"Greece will not discuss such a possibility, it is out of the question that we would accept it, these are matters of national sovereignty," a Greek government source told AFP.
According to a Saturday report by Financial Times, Germany had submitted a proposal to have the eurozone assume control over the Greek budget before it receives a new bailout.
Under the proposed plan a commissioner appointed by other eurozone finance ministers would have the power to veto budget decisions made by the Greek government.
The report said the proposal was circulated to other eurozone officials by Germany on Friday. A European source in Germany has confirmed the report.
Meanwhile, Greek officials are in talks with private creditors on a major debt write down to avoid a looming default and possible exclusion from the eurozone.
Greece's second rescue package, worth 130bn euros includes a voluntary restructuring of Greek debt, meaning bondholders would have to write off 50 percent of the Greek bonds' value.
The negotiations come after German Chancellor Angela Merkel warning Greece will not receive its next aid tranche unless the voluntary reduction of Greek debt moves forward.
The European Union (EU) and the International Monetary Fund (IMF) have presented Greece with two rescue packages in return for specific austerity measures, which include the cutting of public sector salaries and pensions, increasing taxes and overhauling the pension system.
Despite the austerity cuts and the bailout funds, which have been aimed at stimulating growth for the troubled Greek economy, the country has been in recession since 2009.
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