Greece needs reforms, not debt relief - Germany's Schaeuble

BERLIN (Reuters) - Greece must carry out structural reforms instead of receiving further debt relief if it wants to achieve sustainable growth and stay in the euro zone, Germany's finance minister said on Sunday.

Wolfgang Schaeuble's comments to Bild am Sonntag came ahead of a meeting of euro zone finance ministers in Brussels on Monday to discuss short-term measures to lighten Greece's debt burden and assess progress in reforms set out in its third bailout programme.

Asked whether it might be time to tell German voters that a debt forgiveness for Greece was inevitable, Schaeuble told the newspaper in an interview: "That would not help Greece."

"Athens must finally implement the needed reforms. If Greece wants to stay in the euro, there is no way around it - in fact completely regardless of the debt level."

Schaeuble, a senior member of Chancellor Angela Merkel's conservatives, said the Greek budget was hardly burdened by debt repayment after its European partners had already shaved interest rates and prolonged maturities for granted aid loans.

His comments reflect growing unease in the German government that budgetary discipline and willingness to reform are decreasing in other euro zone countries.

Germany is heading into an election year in 2017 and Merkel's conservatives face a tough challenge from far-right Alternative for Germany (AfD), which is likely to enter the national parliament for the first time.

An Emnid poll published on Sunday put support for Merkel's conservatives up two points at 37 percent, the highest level since January in that survey. The Social Democrats stood at 22 percent and the AfD at 12 percent.

The anti-immigrant AfD is strictly against the euro zone's current policy of bailing out struggling member states under the condition of structural reforms.

Greece's official creditors - the European Stability Mechanism (ESM), the ECB and the IMF - are assessing Athens' delivery on reforms and fiscal targets set in its bailout programme of up to 86 billion euros ($92 billion) agreed last summer, the third aid package for Greece since 2010.

Greece hopes to swiftly conclude the review and secure short-term debt relief so that its bonds are included in the ECB's bond buying scheme and it can return to capital markets before 2018, when its current bailout expires.

The main sticking point in talks with lenders are unpopular labour reforms, including collective bargaining, a mechanism to set the minimum wage and giving companies more freedom to lay off workers.

($1 = 0.9373 euros)

(Reporting by Michael Nienaber; Editing by Clelia Oziel)