Greece's Alexis Tsipras optimistic bailout deal will happen by May 9

Greece's prime minister voiced hope that bailout talks between the cash-strapped country and its international creditors are "very close" to an initial deal, and ruled out early elections if the dragging negotiations fail.

Alexis Tsipras told private Star TV that he believes a first agreement can be struck by the end of next week, which can then be ratified by Greece's European partners.

• Keeping Greece in the eurozone is worth the pain: Don Pittis
• ​Why Europe fears a Grexit more than a new bailout

"I think that by the 9th of May we will have an agreement" that will allow release of some bailout funds, he said in a three-hour interview screened just before midnight Monday.

Since its election in January, Tsipras's radical left-led government has been locked in increasingly fraught talks with other European countries that use the euro currency — which provide the bulk of the bailout cash that has kept Greece afloat for five years.

At stake is a final 7.2 billion-euro ($7.8 billion US) rescue loan installment, which will enable the country to keep up payments to its European creditors and the International Monetary Fund — as well as to state employees and pensioners. Greece's cash reserves are perilously low, and failure to meet its obligations could potentially trigger a chain of events eventually forcing the country to abandon the euro.

A major test would be on May 12, when Athens has to pay the IMF about 700 million euros ($757 million). Tsipras said that if the government has to choose, "our priority is our responsibility towards society, it is [paying] pensions and salaries."

Creditors are demanding further reforms and savings, and have encountered strong opposition from Tsipras's government that was elected on promises to alleviate five years of income cuts and fiscal pain.

Tsipras ruled out early elections if the talks fail. But, while insisting he expects an agreement, he did not exclude holding a referendum on the matter.

"If I end up having an agreement that puts me outside the limits [of my mandate], I will have no other resort," he said. "The people will decide — obviously without elections, I want to make that clear."

Earlier Monday, Greece reshuffled its bailout negotiating team following fierce criticism of its flamboyant finance minister, meeting with market applause as investors hoped it will facilitate a deal to save the country from bankruptcy.

Tsipras insisted that Yanis Varoufakis, who has come under fire from his European peers for dragging his feet in the bailout talks, continued to enjoy the government's support. He will continue to lead the negotiations.

But Euclid Tsakalotos, who is minister of international financial relations and part of the foreign ministry, will handle the coordination within Varoufakis's negotiating team.

Tsakalotos is close to Tsipras and has often accompanied Varoufakis on trips to European capitals during the negotiations.

The moves suggest Athens is intent on reaching a deal and the main Greek stock index rallied on the news, closing up 4.4 per cent. Yields on the country's two-year bonds — a gauge of market fears that the country might default — fell almost two percentage points to about 23 per cent.

Varoufakis was rebuked by Greece's creditors most recently at a finance ministers' meeting in Riga, Latvia, where he failed to come up with a list of economic reforms creditors are demanding.