Greece debt extension could cost up to 30 bn euros: source

(BRUSSELS) - The eurozone is looking at how a request by Greece for a two-year extension to its EU-IMF debt rescue can be met, at a possible extra cost of 30 billion euros in additional aid, European sources said on Friday.

"On the extension, things are moving but we must establish the cost involved and how it would be financed," one source told AFP as officials from the EU, International Monetary Fund and the European Central Bank continue discussions with Athens on its next aid payment.

The source said that an extension for Greece -- meaning it would have until 2016 instead of 2014 to meet the economic targets set in its bailout -- would cost "between 20 and 30 billion euros."

That would be "a new cost and a new political problem but 20 billion euros, when put in context, it is not catastrophic but it is politically difficult," the source said as eurozone officials prepared for a meeting on Greece.

Athens wants to have more time to meet its bailout targets so as to ease and spread out the pain of the stinging austerity measures it has taken so as to stabilise the public finances.

Greece obtained an EU-IMF bailout of 110 billion euros in 2010 but when that did not work, it had to go back again, agreeing a deal which included 130 billion euros in new aid and more than 100 billion euros in a radical government debt restructuring.

Greek Finance Minister Yannis Stournaras insisted on Thursday that the government would stand by additional measures agreed with the EU-IMF-ECB troika in return for its next instalment of aid, despite strong resistance to more austerity within the governing coalition.

The European source said that the eurozone would not agree to another restructuring of Greek debt nor give it a new loan.

As for the idea of cutting the interest rate charged on the rescue loans, that was difficult because other bailed-out eurozone countries -- so far Ireland and Portugal -- would demand the same, the source said.

Another problem is that Greece, with the programme extended, could miss the key target of reducing its total debt to 120 percent of Gross Domestic Product by 2020, a point the IMF is very focused on.

The source said that the immediate issue was for the troika to agreed on Greece's next aid payment of 31.5 billion euros, after Athens had warned that it would run out of money next month.

"It is urgent to free up the aid payment, or at least a part of it, to avoid bankruptcy," the source said.