Greece and its creditors reported progress on a major debt writedown deal after fresh talks on Friday, as Athens seeks to escape a looming default and stem further turmoil in the eurozone. Charles Dallara and Jean Lemierre, the lead negotiators for banks, insurers and other private investors, met Prime Minister Lucas Papademos and Finance Minister Evangelos Venizelos for talks lasting two hours. The Private Sector Involvement (PSI) deal under discussion would see the creditors agree to a discount or \"haircut\" of at least 50 percent on the 200 billion euros in debt they hold. A Greek finance ministry reported \"great progress concerning technical and legal matters\" but underlined there \"is still a lot of work left to do.\" And in a statement late Friday, the creditors said: \"Important understandings were reached on legal and technical issues ... Progress was made and discussions will continue tomorrow (Saturday).\" Venizelos, before the start of talks, said: \"We are a step away from concluding procedures on the PSI\", adding the negotiations \"were difficult and delicate\". The third round of talks between Athens and private creditors, which began Thursday, seeks agreement on a voluntary exchange of bonds that would wipe 100 billion euros ($130 billion) off the country\'s debt of 350 billion euros. Athens faces a critical bond reimbursement worth 14.5 billion euros on March 20. It had hoped to present European Union leaders a framework agreement on the debt writedown at their summit on Monday, and sign an agreement by February 13 so there is sufficient time for the writedown to be achieved. Sources have indicated a potential shortfall of up to 15 billion euros ($20 billion) if Athens is to meet an EU-IMF target for debt sustainability, with banks playing hardball over a big debt writedown from their side. \"If our Greek friends do their bit, we must support them,\" European Commission chief Jose Manuel Barroso said, implying that governments would have to step in where banks would not. Barroso argued that a messy default would signal a \"major problem\" not only for Greece but for the eurozone as a whole. A new analysis will be conducted by the IMF and the eurozone to ensure that the writedown returns Greece\'s debt to a sustainable level, according to a Greek finance ministry official. The IMF, which is bound by rules to lend only to countries that have sustainable debt levels, has insisted that the level of Greek debt be reduced to no more than 120 percent of gross domestic product. It currently stands at around 160 percent and sources close to the talks said proposals on the table would only get the figure down to about 130 percent. Jean-Claude Juncker, head of the Eurogroup of eurozone finance ministers, said Friday that Greece\'s creditor countries should also waive a portion of the country\'s debt, as cutting private debt alone was not enough. The European Central Bank (ECB), which holds around 45 billion euros\' worth of Greek bonds, has so far ignored calls for it to accept losses. IMF chief Christine Lagarde also warned Wednesday that European public creditors would need to pitch in and help Greece. If a deal with private creditors is reached, Athens can pursue talks with EU partners on a second public aid package worth about 130 billion euros. But the Financial Times reported that Germany wants Greece to surrender sovereignty over fiscal policy to a eurozone commissioner before it gets a fresh bailout. \"Budget consolidation has to be put under a strict steering and control system,\" the FT quoted from the proposal, which it said had been circulated by Germany on Friday to other eurozone officials. German Finance Minister Wolfgang Schaeuble, meanwhile, called on Greece to move quickly on economic reforms. \"We\'ve had enough announcements, the government in Athens must act now,\" he was quoted as saying in an interview with the Stuttgarter Zeitung newspaper. Greece has implemented austerity measures but has been slow to implement structural reforms and push ahead with privatisations that are considered necessary for the country to get growth back on track and pay its debts.