ATHENS - Progress was achieved during "productive" talks held in Athens on Thursday between the Greek government and private creditors regarding the sovereign debt writedown, the Institute of International Finance (IIF) said.

"Progress was made and talks will be continued on Friday," according to a statement of IIF.

The sources said that the two sides are close to a final agreement on the terms of the voluntary "haircut" of part of the Greek state debt owned by private sector creditors, after two-month marathon talks.

A positive outcome of the discussions will open the way for the release of a second multi-billion euros vital bailout loans package to Athens in following weeks under the October eurozone summit deal by international lenders.

The Private Sector Involvement (PSI) plan is a key part of the eurozone agreement to make the Greek national burden sustainable. Without the deal and further financial support by EU and International Monetary Fund (IMF) which keep Greece afloat since May 2010, the euro zone member country could default in late March.

According to Greek media, a key issue to be resolved in PSI talks, aimed at slashing the current over 350 billion euros ($453.63 billion) Greek debt by some 100 billion euros is the interest rate Greece will offer private banks and investors for new bonds with longer maturities.

The private sector is said to have pressed initially for an interest rate of around 5 percent, while Greece backed by European counterparts insisted on the other hand on a rate beneath 4 percent.

According to sources, under discussion at the moment is an average interest rate of 4 percent starting at around 3 percent progressively increasing to 4.75 percent.