By Robin Emmott and Jan Strupczewski
RIGA (Reuters) - Greece offered some concessions on Friday on reforms demanded by international lenders in return for new funding before Athens runs out of money, but euro zone creditors said negotiations needed to speed up to get a deal by June.
After talks with German Chancellor Angela Merkel on Thursday in Brussels, Greek Prime Minister Alexis Tsipras said he wanted a deal by the end of this month. Merkel, in a comment seen as underlining the determination of Europe's main paymaster to keep Greece in the euro zone, said "everything must be undertaken to prevent" Athens running out of cash.
In a blog published as euro zone finance ministers met in Riga to assess progress on a reform-for-cash package to ward off a Greek default, Finance Minister Yanis Varoufakis agreed to some of the lenders' conditions, still declaring that the euro zone must drop "an approach that has failed".
"The current disagreements with our partners are not unbridgeable," Varoufakis wrote in the blog, saying that he was open to some privatisations and an independent tax commission. He rejected any more wage or pension cuts and said he wanted leeway on the government's primary budget surplus targets.
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"Our government is eager to rationalize the pension system (for example, by limiting early retirement), proceed with partial privatisation of public assets, ... create a fully independent tax commission," Varoufakis said.
Those reform pledges could ease tensions following three months of largely fruitless talks since radical leftists won power in Athens on a promise to reverse austerity and renegotiate Greece's 240-billion euro bailout package.
European Commission Vice President Valdis Dombrovskis said there would not be a deal in the Latvian capital and told Greece to accelerate its work on a reform list.
Slovak Finance Minister Peter Kazimir, who confessed to being "just a bit tired" of the Greek saga, said the end of June was now the final date for a deal because Greece's bailout expires then.
Already investors are looking to the next finance ministers' meeting in Brussels on May 11, but several euro zone officials told Reuters they do not expect a deal then either. Greece is due to pay 750 million euros back to the International Monetary Fund the following day.
"There is a great sense of urgency for all of us. I have spoken to my colleagues in Athens and they're very determined to get the deal. They know that the time is running out," said Jeroen Dijsselbloem, chairman of the Eurogroup of ministers.
'NO GREXIT'
The impact of a potential Greek default is the biggest risk to the euro zone's economic recovery after a long crisis from which the 19-nation currency area is finally emerging.
Austrian Finance Minister Hans Joerg Schelling insisted Greece would stay in the euro zone and EU officials believe Athens can scrape together enough cash to meet its payment obligations into June.
Asked about the danger of a "Grexit", Schelling told reporters: "There is no exit from the euro, only from the European Union."
However, unlike at the height of the euro zone crisis in 2011-12, economists believe the euro zone is far better placed to withstand any Greek default because the currency bloc has its own bailout fund, support from the European Central Bank and a banking union that can protect banks from crisis fallout.
"The risk of contagion exists, but it is much lower than it was before," Standard & Poor's Chief Economist Jean-Michel Six told Italian financial daily Il Sole 24 Ore.
The Greek government wants a broad political deal with other euro zone leaders, leaving officials to fill in the details. But partly due to a lack of trust, the euro zone, led by Germany, insists technicians must draft a detailed, comprehensive agreement and only then will governments sign off on it.
ROOM FOR MANOEUVRE
The lack of progress is starting to hurt Tsipras' popularity and that of his government. Varoufakis warned in his blog against pushing Greece too hard, saying the Greek people would not support more spending cuts after one of the deepest recessions in Europe since the 1950s.
In Riga, French Finance Minister Michel Sapin told Reuters there was room for manoeuvre on Greece's primary surplus, the budget balance before debt servicing costs, "as long as it remains positive."
Greece officials say they are aiming for a primary budget surplus of 1.2 to 1.5 percent of gross domestic product this year, below the goals of 3 percent in 2015 and 4.5 percent in 2016 set in Greece's 2012 EU/IMF bailout programme.
Still, Greece is not mulling calling a referendum or a snap election because the government already has a recent popular mandate, its government spokesman said on Friday.
"We have no reason to bring these issues on the table because we have and we are implementing the popular mandate we received on January 25," government spokesman Gabriel Sakellaridis told Greece's Mega TV.
(Reporting by Jan Strupczewski, Robin Emmott, Ingrid Melander, Lefteris Papadimas,Tom Korkemeier, Gederts Gelzis, Francesca Landini; Editing by Paul Taylor)
