Reforms to dominate Greek talks in Paris, debt relief talks later-source

ATHENS, Sept 2 Tue Sep 2, 2014 4:26am EDT

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ATHENS, Sept 2 (Reuters) - Greece hopes to assuage concerns it is slipping up on reforms during talks with European and IMF inspectors in Paris this week, with debt relief talks unlikely to start until October, a senior Greek government official told Reuters.

European Union/International Monetary Fund lenders bailing out Greece begin their latest review of the country's progress on its obligations this month, but in a break from the past, the initial phase of talks starting Tuesday is being held in the French capital instead of Athens.

That has prompted speculation that the talks could yield a broad-based agreement on major issues including further debt relief and additional funding needs for Greece as the twice-bailed out nation emerges from a six-year recession.

But the senior official cautioned that the effort to meet outside Athens was mainly to avoid a lengthy inspection similar to last year's fall review that dragged on for seven months and that the talks would focus on reforms achieved to date.

"It will be a preliminary discussion on the state of play," the official told Reuters. "We want to show that reforms are on target, soothe those who worry that reforms are not being met."

Athens has come in for criticism in recent months from some - including former EU economics commissioner Olli Rehn - that it has slowed down the pace of reforms since European elections in May won by the leftist opposition, anti-bailout Syriza party.

The Greek official added that widely-expected debt relief negotiations were unlikely to begin until after the latest bailout review is over and results of European Central Bank stress tests are announced in mid-October.

"Debt relief is not on the agenda," the official said, referring to the Paris talks. "It is something that we might see after mid-October, probably after the bank stress tests."

Greece has staged a sharp turnaround on its finances since nearly going bankrupt two years ago at the peak of its debt crisis but is still expected to require additional concessions from lenders before its debt mountain is considered manageable.

Debt is expected to hit a peak of 177.2 percent of GDP this year before starting to decline next year.

The country also still faces record unemployment of over 27 percent but has begun to post budget surpluses before interest payments and successfully returned to bond markets twice this year after a four-year exile.

The talks in Paris start later on Tuesday and end Thursday, with the EU/IMF bailout review set to continue in the Greek capital later this month.

The periodic bailout reviews by EU/IMF inspectors in Athens - and the threat of additional austerity demanded by them - are often blamed by retailers for depressing consumer sentiment, while unions use the visits to stage angry protests. (Editing by Jeremy Gaunt)

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