ESM's Regling says Greek debt relief possible, but no haircut

BERLIN (Reuters) - The head of the European Stability Mechanism said on Thursday that options for easing Greece's debt burden included extending loan maturities, suspending interest payments and transferring central bank profits, but he ruled out a debt "haircut".

The International Monetary Fund says Greece's debt is not sustainable and it does not want to participate in a third bailout unless there is some debt relief.

Klaus Regling, head of the ESM bailout fund, told a news conference in Berlin that another election in Greece was increasing uncertainty.

But "overall, I'm confident," Regling said, adding that he expects support for the bailout to grow in Athens. "There has been a large majority in Greece's parliament for these reforms."

On Wednesday, outgoing Greek Prime Minister Alexis Tsipras, who hopes to return to power with an absolute majority, told Alpha TV that he favored longer repayment periods and lower interest rates on Greece's debt burden.

But in the interview, he made no mention of writing off any debt - a campaign promise when he was elected in January that Germany, the biggest contributor to Greece's three bailouts since 2010, opposes.

Regling said a Greek exit from the euro zone was a possibility and remains a threat if Athens does not fulfill the conditions of its third bailout agreement.

"This threat as a possibility must always be there and is still there," he said.

(Reporting by Erik Kirschbaum and Paul Carrel; Editing by Noah Barkin/Ruth Pitchford)

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