EU/IMF rift on Greek debt is hurting country, Tsipras says

By George Georgiopoulos

THESSALONIKI, Greece (Reuters) - A rift between the International Monetary Fund and the European Union over how to make Greece's debt sustainable is damaging the country's attempts at economic recovery, Prime Minister Alexis Tsipras said on Sunday.

Describing the debt pile, equivalent to more than 170 percent of economic output, as not just a Greek but a "European problem", he said investors would remain wary of the country for as long as the two sides were at odds on how to restructure it.

"I would say that what is creating conditions of delay in regaining trust of markets and investors ... is the constant clash and disagreement between the IMF and European institutions," Tsipras told a news conference in the northern city of Thessaloniki.

Greece almost tumbled out of the euro zone last year, with investors fleeing its assets as talks dragged on between Athens and international lenders over terms of a financial bailout, the country's third since 2010.

The IMF has yet to decide whether to participate in Greece's newest international bailout, saying it is not yet convinced the country's debt is sustainable or its fiscal targets feasible.

Greece's debt to GDP ratio is the highest in the euro zone.

Tsipras said differing views among lenders was preventing the inclusion of Greek debt in the European Central Bank's quantitative easing (QE) asset purchase programme. The ECB has said it cannot specify when it could start buying Greek bonds, but that Greece needs to pass a debt sustainability analysis before it happens.

Lenders have promised to look at how Greece's debt mountain can be made sustainable, and whatever they decide will swing whether the IMF decides to sign up for the latest bailout deal.

NO EARLY ELECTIONS

Tsipras, a leftist who came to power in early 2015 promising to end years of austerity, is trailing opposition New Democracy in opinion polls. A Kapa Research poll published by the To Vima newspaper on Saturday showed New Democracy ahead by 3.9 points.

On Sunday, Tsipras ruled out early elections, saying: "The country doesn't need elections. The country needs stability."

On Friday, euro zone finance ministers called on Greece to stay on track with reforms it must pursue under the bailout, which is worth up to 86 billion euros, ahead of a second review of progress in meeting terms that is due to start in October.

It still needs to pursue energy market reforms, create a new body to oversee privatisations and establish a new independent revenue agency.

The Greek premier said the country had already completed 70 percent of reforms required under the bailout programme.

Tsipras, who eschews ties and prefers open-collared shirts, reiterated a pledge that a "significant event", such as debt relief, would make him put one on.

"I never got married, so I couldn't wear one at my wedding," he joked. "I don't have any hang-ups about it, but I made a commitment that I would make that wardrobe change when we have an important event."

(Additional reporting by Renee Maltezou; Writing by Michele Kambas; Editing by Catherine Evans)