Greece not ready yet for ECB to buy its bonds: Draghi

By Francesco Canepa and John O'Donnell

FRANKFURT (Reuters) - Greece has to pass a review of its bailout program and show a commitment to reforms before the European Central Bank can start buying its bonds as part of the bank's asset purchase program, ECB President Mario Draghi said on Thursday.

Greece has so far been excluded from the quantitative easing (QE) program due to its low credit rating but it could be admitted through a waiver for bailed-out countries.

Draghi said on Thursday Greece would first need to pass an official review of its reform progress, due to start next month, as well as an analysis of the sustainability of its debt by the ECB's governing council.

"For reinstating the waiver the country has to be in a program for financial assistance, has to comply with it and so has to show strong ownership and consistent and significant implementation," Draghi told a news conference after the ECB left interest rates unchanged.

"There will be some milestones that will be ...assessed in the weeks ahead and based on that assessment the Governing Council will take a decision."

Greece will hold parliamentary elections on Sept. 20, with an opinion poll showing the conservative New Democracy taking the lead over former prime minister Alexis Tsipras's leftist Syriza party. Tsipras signed a bailout deal with international creditors in July after bruising negotiations.

TECHNICAL CONDITIONS

A number of technical conditions will also need to be fulfilled for Greece to qualify for QE, Draghi said, since the ECB already holds a sizable chunk of Greek bonds bought under its previous Securities Markets Programme (SMP).

The ECB limits its purchases to a third of a country's outstanding securities that fall within its eligible maturity range, so as not to interfere in any potential bondholder decision to restructure debt.

The bank raised the share of individual bonds it can buy under the QE program to 33 percent from 25 percent on Thursday, except in cases where that would give it blocking minority power.

"We will have to look at other conditions there," Draghi said. "And finally there has to be a debt sustainability analysis by the Governing Council."

(Reporting by John O'Donnell Editing by Jeremy Gaunt and John Stonestreet)

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