UPDATE 1-IMF and EU at odds over Greek debt sustainability
* EU and IMF at odds on Greek debt sustainability
* IMF wants to wait until after Oct. 23 summit to assess
* Private sector may have to make deeper contribution
BRUSSELS, Oct 20 (Reuters) - The International Monetary Fund disagrees with EU projections on Greece's debt sustainability and wants to wait until a clearer outlook emerges before signing off on the next tranche of financial support to Athens, EU officials said on Thursday.
The IMF, which together with the European Commission and the European Central Bank comprises the 'troika' of inspectors in Greece, believes the EU's debt projections are too optimistic and wants to wait until after a euro zone summit on Sunday to see if discussions there produce a clearer picture on how the debt levels can be made more sustainable.
"The IMF thinks that estimates by other parts of the troika are over-optimistic," one source said, while another added: "The IMF will definitely want to see what the Eurogroup and the European Council come up with first," referring to this weekend's meetings.
The IMF was not immediately available to comment.
The troika was expected to publish its latest report on Greece on Oct. 24, despite pressure to release it before the Oct. 23 summit. The report is expected to indicate whether Greece is doing enough to cut its budget deficit to justify receiving the next, 8 billion euro installment of aid.
If Sunday's summit agrees on a deeper involvement by the private sector in helping reduce Greece's debt burden, that may make the debt stock, which stands at around 360 billion euros, more sustainable and allow the IMF to sign off on the release of the next tranche, possibly in November, the sources said.
The IMF has said in the past that it needs to be confident in Greece's medium-term financing -- at least a year out -- before it can sign off on further aid to the country. Holding off on approval is a way of applying pressure on Athens.
In May last year, the EU and IMF agreed to disburse 110 billion euros of loans to Greece, five installments of which have been paid. If the next tranche is not released by the end of the year, Greece could default on its debts.
Some euro zone countries are pushing for the private sector to play a much more significant role in reducing Greece's debt burden by taking a larger writedown on their holdings of Greek debt.
On July 21, the private sector agreed on a voluntary basis to take around a 21 percent "haircut" on its Greek debt holdings, helping reduce the debt burden by around 50 billion euros between now and 2014.
However, that is now deemed insufficient by some countries and there is a push to sharply increase the private sector's contribution, even if it is not done voluntarily.
If that were to happen, it would likely reduce the debt pile more aggressively, putting Greek debt on a more sustainable footing and in turn allowing the IMF to sign off on the next aid payment.
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