Greece's Prime Minister said on Monday an exit from the euro area and a return to the drachma, the country's old currency, “is really not an option.”

In an interview with CNBC, Lucas Papademos, a former central banker, said he was confident the debt-wracked country would avoid default in March when a 14.5 billion euro bond falls due.

“Our objective is to complete the two processes and also to fulfill our commitments that have been made in the past... and we are confident that we’re going to achieve this,” Papademos said.

Following talks with Papademos in Athens, German Foreign Minister Guido Westerwelle on Sunday expressed confidence that the negotiations with Greek bondholders over a 50 percent haircut, also known as PSI, would reach a positive conclusion despite no deal being reached last week.

Negotiations appeared to hit a snag at the end of last week, but the Greek prime minister did not appear fazed by the skepticism.

“Over the past few weeks, substantial progress has been made towards reaching an agreement between creditors and Greece,” Papademos told CNBC adding that they were “close to an agreement.”

“But some further reflection is necessary on how to put all the elements together. So as you know, there is a little pause in these discussions. But I’m confident that they will continue and we will reach an agreement that is mutually acceptable in time,” he said.

Papademos said all the parties involved in the coalition government were determined to keep Greece in the eurozone.

"This is the position of this government and of all the parties that are supporting it, and what is more important, the overwhelming majority of the Greek people are in favor of euro area membership,» he said.