UPDATE 3-EU says Greek aid could be split into instalments
* EU's Rehn says possible to split 8.1 bln euro tranche
* Euro zone finance ministers to tackle issue on Monday
* Greece offers plan to resolve public sector reform hurdle
By Terhi Kinnunen and George Georgiopoulos
MIKKELI, Finland/ATHENS, July 5 (Reuters) - Greece could get its next tranche of international aid in instalments, the EU's top economic official said on Friday, keeping the country in a hand-to-mouth existence that threatens to stifle its economy.
Athens had hoped that euro zone finance ministers would sign off on the next 8.1 billion euro ($10.4 billion) tranche of aid when they meet on Monday, even though Greek officials have conceded the government will not meet an end-of-week deadline for reforming the public sector.
On Friday, Olli Rehn, the European commissioner in charge of economic and monetary affairs, confirmed what many officials have said privately - that the tranche could instead be split into several instalments.
"It is possible, but not certain," Rehn told a seminar in his hometown of Mikkeli, Finland, when asked about the issue. "It all depends on whether Greece can meet all requirements that they are committed to."
In Athens, Greek finance ministry officials said the two sides were "close" to a deal.
"The chances of reaching a deal tomorrow have risen," said a senior official after the latest round of negotiations with the troika that lasted over four hours.
Asked if Greece would receive the money in one go, the official replied: "The tranche will be such as to cover our needs."
Rehn said earlier that talks involving the International Monetary Fund, the European Commission and the European Central Bank, which make up the 'troika' of lenders, would "continue as long as needed".
The euro fell slightly against the U.S. dollar on Rehn's comments.
Athens has said it expects to reach a deal by Monday's meeting of euro zone finance ministers, despite failing to meet an end-June deadline to identify public sector workers to be redeployed or laid off.
"JUNTA OF TROIKA MEN"
Greece has proposed putting 3,500 municipal police workers immediately into the scheme and transferring high school teachers to primary schools with staff shortages, officials at the administrative reform ministry said after talks on Friday.
It was not clear if the troika had accepted the proposal.
Dozens of municipal workers chanting "Down with the junta of the troika men!" protested outside the Administrative Reform Ministry during a meeting between the inspectors and Kyriakos Mitsotakis, the newly-appointed minister tasked with making the civil service leaner and more efficient.
Greece has been kept afloat by emergency loans since May 2010, a few months after revelations about its debts ignited a crisis that shook the euro zone and threatened to force Greece to give up the shared currency.
The latest loan instalment is one of the last big cash injections that twice-bailed-out Athens stands to receive as part of a 240-billion-euro rescue package that expires at the end of 2014.
It needs the money in part to redeem about 2.2 billion euros of bonds in August.
The public sector layoffs and privatisations needed to win aid are an incendiary issue as Greeks struggle through a sixth year of recession with record high unemployment.
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