BRUSSELS The euro zone is putting the finishing touches to a second bailout deal for Greece for finance ministers' approval on Monday, with the focus on how Greece can prioritise debt repayment and ways to ensure Athens implements agreed reforms.
"We are almost there," one euro zone official said. "Unless someone really comes up with an idea to undermine the whole deal, it should be approved on Monday."
Officials said proposals floated by some euro zone countries to postpone talks on some or all of the package until after Greek elections expected in April, did not gain wider support.
Euro zone finance ministers will also analyse at their meeting on Monday the implications of a Greek debt sustainability analysis - a document distributed to ministers just before a conference call on Wednesday afternoon.
The focus of the debate is how far Greek debt can be reduced - from its current level of 160 percent of GDP - by 2020.
The analysis, prepared by the European Commission, the European Central Bank and the International Monetary Fund (IMF), shows that Greek debt in 2020 would be around 129 percent of GDP. That compares with a target of 120 percent established in October by euro zone leaders, officials said.
"The end result ... does not match the parameters of the October agreement," a second euro zone official said.
Several euro zone officials have said that a target of 125 percent of Greek debt in 2020 would still be acceptable to most euro zone officials - and possibly also to the IMF - because there were so many variables that could affect the outcome.
The analysis lists measures that could get the debt ratio lower than 129 percent, and the finance ministers will discuss these on Monday, officials said.
Ideas include the euro zone cutting the interest on its existing bilateral loans to Greece; increasing its current offer of 130 billion euros (107.7 billion pounds) of government financing; and asking private investors to agree to bigger losses.
German Finance Minister Wolfgang Schaeuble told German lawmakers last week that government participation in the second package may have to rise to 136 billion euros from 130 billion.
A further option is for the European Central Bank to forego profits on Greek bonds it holds in its portfolio and to re-sell them to euro zone's bailout fund, the European Financial Stability Facility (EFSF), at the same discount it bought them on the market.
"You don't have to do them all," the second euro zone official said. "It is enough to do some of them to get very close to the October parameters ... This was already discussed for half the conference call on Wednesday and will be discussed again by civil servants before the Eurogroup on Monday, but some things will be left open for the ministers," the official said.
Time is running out for a decision on the package. Without a go-ahead from the euro zone finance ministers, Greece cannot formally launch a debt restructuring offer to private investors. This aims to halve in nominal terms what Greece owes to investors, slashing its debts by 100 billion euros.
Greece is due to pay back 14.5 billion euros in maturing bonds on March 20. If it does not have a deal in place before that, it will default on those bonds.
If euro zone finance ministers approve the second package on Monday, Greece will be able to launch the offer on Tuesday or Wednesday, officials said, giving much less than the usual 3-4 weeks for investors to respond.
The offer would then close on Thursday, March 8, be processed on Friday, March 9 and Greece could then exchange its old bonds for new ones over the following weekend, the second euro zone official said.
Euro zone ministers also want Greece to ensure that it will service its debt as a matter of priority. The European Commission is preparing for Monday a proposal to set up an escrow account for Greek to facilitate the debt servicing.
A special account would make sure that Greek government revenues would go to service the debt rather than risk being taken up by general expenditure.
Officials said that Greece had been open to this proposal on the Wednesday Eurogroup conference call.
The Commission will also prepare a proposal to beef up its monitoring capacity of the Greek economy to make sure that reforms agreed to under the bailout are implemented.
This could involve increasing the number of staff from the Commission as well as the permanent stationing in Athens of experts from euro zone countries, one official said.
(Reporting By Jan Strupczewski. Editing By Sebastian Moffett.)