IMF says Greek debt relief needs long grace, maturity periods

IMF chief spokesman Gerry Rice also told a regular weekly news briefing that the Fund's board will not consider approving a new bailout program unless it contains debt relief measures from European lenders along with policies to boost Greece's fiscal savings.

Rice declined to confirm reports the IMF is pushing for a halt in Greek debt repayments until 2040 as part of the negotiations.

"We have exchanged preliminary views with our partners on general principles regarding debt relief," Rice said. "We believe that it is possible to restore debt sustainability without upfront haircuts, although this would involve providing very concessional loan terms, including long grace and maturity periods and very low interest rates".

Euro zone finance ministers are due to meet next Tuesday to try to clinch a deal with Greece on a package of contingency steps to ensure Athens will meet future fiscal targets as well as reach a political agreement on future debt relief for Greece.

Euro zone ministers have pressed to delay decisions on debt relief until 2018, enacting it only "if necessary." But the IMF insists that Greece's debt repayments are unsustainable and needs restructuring now.

Rice also said that the IMF still views the primary budget surplus targets for Greece of 3.5 percent of gross domestic product as unsustainable in the long term, adding, "We believe that this would mean too much austerity."

The Fund has been pressing Greece to reduce "generous" pension benefits and tax exemptions that mainly benefit wealthier Greeks.

If a deal is reached next week, Rice said that he could not say when the IMF's board would be in a position to consider it. Asked to comment on speculation that the IMF actually wants to leave the Greek bailout program, he said the Fund was "fully engaged" with trying to reach a workable solution.

"Staff have indicated their readiness to present a program for the board's consideration once the program includes the necessary policies and the debt relief that can make the program add up," he said. "We see both these elements as critical."

Rice added that it was important to have a "realistic" program for Greece because it expects the same from its other 188 member countries.

"The IMF is flexible, but we have a job to do and the membership looks to us to do that job," Rice added.

(Reporting By David Lawder; Editing by Chizu Nomiyama and Bernadette Baum)