Athens/LUXEMBOURG (Reuters) - Greece is probably an essential part of the aid in July to avoid default, international donors said Friday, while the European Union has raised the possibility of extending the State of the eurozone rescue plan.
The European Commission, the European Central Bank and Monetary Fund International, ending a long month of their rescue program review 110 billion euros ($160 billion), said Athens had made considerable progress to repair its finances but must intensify tax and economic reforms.
"Once this process is completed, and the approval of the IMF Executive Council and the Eurogroup, the next slice will become available, most likely, early July,"they said."".
Finance Minister George Papaconstantinou said that Athens will be unable to fulfil its obligations of mid-July if it does not get the next tranche of 12 billion euros rescue loans. Money was originally due for release on June 29.
Separately, the President of euro-zone Finance Ministers held the prospect of additional support for the Greece beyond the original rescue scheme, which was agreed in May of last year.
"I expect the Eurogroup to accept additional finance provided to the Greece under strict conditionality", Jean-Claude Juncker said after talks with Greek Prime Minister George Papandreou at the Luxembourg.
The new plan will be for the first time understand the participation of investors in the private sector to help the Greece on a voluntary basis, said Juncker.
He did not detail and sources close to the talks, said the way in which private investors would be involved was still under intense debate between the EU and the ECB officials. A form any overturning of the debt, in which investors would maintain their exposure thanks to the purchase of existing Greek when bonds mature, appears the most likely.
Greek newspaper Kathimerini that, said a new rescue plan three years for the Greece, until 2014, would amount to 85 billion euros, which the European Union and the IMF would provide less than half. The remaining money would come from the sale of property of the Greek State and a reversal of the debt of the private sector, he said.
Greek and of other high-efficiency euro zone bonds rallied and application for refuge German debt fell as expected market makers would reach a deal of fresh rescue for the Greece. The euro reached a maximum of one month against the dollar.
Papandreou presented to Mr Juncker a budget medium-term plan featuring more deep spending cuts, measures to increase revenue, and a fast predatory of the property of the State, which will be managed by an independent body to privatization.
EU Monetary Affairs Commissioner Olli Rehn said recent budget commitments of the Greece were "essential" to restore the viability of its finances and could lead to additional support for Athens.
ITS TRAJECTORY
Athens has turned off the coast of course in its current programme of rescue because of a lack to win because of a deep recession and Chronicle of the evasion requiring additional measures, $ 6.4 billion euros or by 2.8 per cent of the domestic product crude this year.
The Greek Finance Ministry, said that the Government should finalize new tax measures in the coming days, put to Parliament after the Council of Ministers approves their.
The new face of measures increased the opposition of unions and protesters, as well as some members of bench back of Papandreou PASOK party to power Socialist Youth.
Leftists have organized a demonstration at the Ministry of finance in Athens Friday, hung a huge banner in the whole of the building to denounce the policies that would be "transformed modern slave workers."
During this time, an increase in EU funding for the Greece face resistance in the parliaments of the fiscally conservative Northern States, especially the Germany and the Netherlands.
Taxpayers in donor countries have so far supported the burden of the rescue of the Greece and his colleagues members of euro Ireland and the Portugal. EU officials feel now that the participation of private investors is important to secure political support for the new help in Athens.
KICK CAN ROAD DOWN
Some European politicians and economists believe that investors in bonds of the Greek Government should more that simply accept a reversal.
Claudio Loser, former Director of the Western Hemisphere for the IMF, said that the Fund should push more difficult for the Greece to the restructuring of its debt and negotiate the so-called "hair cut", or reductions in the value of the bonds with investors.
But the ECB has fought the idea, fearing, it triggers a violent chain reaction on financial markets well beyond Greek borders and provoke a conflict between European banks which hold large amounts of money in Greek debt.
A source involved in the negotiations, said that the participation of investors in the private sector in the new deal would be limited to avoid causing a "credit event". It is an event which inflict losses on holders of Greek bonds and lead to downgrades rating of the Greece credit or the initiation of contracts of insurance on its debt.
Most market economists surveyed by Reuters, however, believe EUR 340 billion debt mountain the Greece is not sustainable and should be restructured sooner or later. Without restructuring, bailout extended Athens simply save time without solving the underlying problem of the Greece.
"I believe (official lenders) have a plan in their head that is reasonable for kicking can, on the road for three months," said Gianluca Salford, strategist at JP Morgan European fixed income securities.
(Other reports by George Georgiopoulos and Lefteris Papadimas Athens, Marius Zaharia, Ana Nicolaci da Costa and Chloe Hayward in London.) Written by Paul Taylor. (Editing by Ruth Pitchford and Andrew Torchia)
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