UPDATE 1-Greece slow on asset sales but may tap bond market soon-EU/IMF

Fri, May 17 2013

* Pace of privatisations unsatisfactory - EU/IMF report

* Athens might try to tap bond markets in 2014 - EU official

* Country needs 4 bln euros extra savings to meet 2016 goals

BRUSSELS/ATHENS, May 17 (Reuters) - Greece's foreign lenders expressed concern at its slow pace of asset sales on Friday but praised the country for tackling its budget gap and said it may be able to tap bond markets in 2014.

In a report summarizing their latest inspection of Greek finances, the European Union and the International Monetary Fund said privatisations were not going fast enough.

Delays might cause Athens to miss its 2.6 billion euro ($3.33 billion) receipts target for this year, a senior EU official told reporters in Brussels after presenting the report.

"We are concerned that there could be delays," the official said on condition of anonymity. "There are issues of state aid that are complicating the asset sales," he added.

Privatisations are a key part of the country's 240 billion euro bailout that obliges Athens to sell assets and generate budget surpluses to cut its outsize debt.

Greece obtained the bailout in mid-2010 after private investors stopped lending to the debt-laden country. It was the first of four eurozone countries that have been rescued since.

In the teeth of its deepest peace-time recession ever, Athens has since cut its budget deficit by about two thirds and passed several structural reforms demanded by its lenders.

If progress continues, Greece might try to tap bond markets next year, the EU official said. "In terms of partial return, I would say that if things continue to improve, maybe next year things could be done," he said.

The official's statement are in line with Greek government plans to try and sell bonds in the first half of next year.

Athens announced the plans as its bond yields dropped to their lowest level since its bailout started and Fitch became the second agency to raise its credit rating to "B-".

A full market return, however, will be hard for years, the report said. "In terms of full market access, things are likely to remain challenging for a while," said the official.

Athens still needs to find additional savings worth 2.1 percent of GDP, or about 4 billion euros, to meet a long-term goal for a budget surplus of 4.5 percent of GDP in 2016, before interest payments, the EU/IMF said.

Any demand for fresh spending cuts might cause friction between Athens and its creditors in the autumn, when they will discuss how to plug the country's remaining budget gap.

Greece's fragile coalition government has said that society would not tolerate more austerity after three years of harsh budget and wage cuts. Extra revenues could be found by cracking down on tax evasion, finance minister Yannis Stournaras said.