UPDATE 1-Juncker says IMF could deny Greece next tranche of aid

Thu May 26, 2011 11:13am EDT

(Adds Juncker quotes)

BRUSSELS May 26 (Reuters) - Greece risks not getting its next tranche of financial aid from the IMF with little prospect that European countries can make up any shortfall, the head of the Eurogroup of finance ministers said on Thursday.

Jean-Claude Juncker, who chairs meetings of euro zone finance ministers, made the remarks as pressure grows on Greece to accelerate reforms and asset sales in return for aid from euro zone countries and the International Monetary Fund.

"The IMF can only be active when there is a refinancing guarantee for 12 months," Juncker told a conference in Luxembourg, adding that he did not believe that the European Union, European Central Bank and the IMF would decide this condition had been met. "I don't think that the troika will come to this result."

He said that should the IMF not pay its part of the tranche, there would be pressure on reluctant European countries to do so.

"If the Europeans have to acknowledge that the disbursement from the IMF on 29 June cannot be operationally implemented, then the expectation of the IMF is that the Europeans would step in for the IMF and take upon themselves the IMF's portion of the financing," Juncker said.

"That won't work, because in certain parliaments -- Germany, Finland and the Netherlands and others too -- there is no preparedness to do so," he said.

Inspectors from the EU, ECB and IMF are examining Greece's finances before a decision is made on granting a further 12 billion euro ($17 billion) tranche of the country's 110 billion euro international bailout. Athens needs the money to cover pressing funding needs of 13.4 billion euros.

(Writing by John O'Donnell; Editing by Ruth Pitchford)

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