ATHENS, Greece — GREECE will receive the next part of its ¤110 billion (US$150 billion) bailout package on time, but still faces challenges in reforms and must make an extra effort to meet next year’s deficit targets, its international donors said yesterday.

The International Monetary Fund, European Central Bank and European Commission said that while they were confident Greece would be able to borrow again on international markets before the end of the three-year bailout period, as it has said it aims to, several options were available to help in case of trouble.

Greece began receiving the IMF and eurozone loans, which run to 2013, in May. The rescue package was its only hope of staving off default after the debt-ridden country found itself essentially locked out of the international market by prohibitively high interest rates demanded for its bonds.

Athens must start repaying the loans in the first two years after the programme ends.

“This means we are going to have a significant hump in debt service repayment as soon as the programme ends,” said IMF mission chief for Greece, Poul Thomsen.

“We are confident that Greece will be able to return to the market during the program period,” he said, but added that it was “admittedly a question” as to whether Greece would be able to tap the market for the full amounts needed to refinance its existing debt and repay the bailout loans.

“We are aware that this is an issue that raises some concern in the markets. We have various options for dealing with it,” Thomsen said.

One option would be to allow a longer repayment period for the rest of the rescue loan financing, or to give follow-up loans.

“If there proves to be a question we stand ready to exercise some of these options. But there has been no decision taken,” Thomsen said.

Finance Minister George Papaconstantinou has repeatedly said he aims for Greece to return to the markets in 2011.

At a news conference yesterday, Papaconstantinou stood by that intention, noting the high repayment amounts Greece will face in 2014 and 2015. He said Greece would be able to return to the markets and meet repayment commitments by generating primary surpluses in 2012.

“That effort may be helped by things like what has been suggested by the head of the IMF,” the minister said, but stressed that no decision had been made.

Greece’s finances undergo an inspection before each quarterly disbursement of the IMF and eurozone loans, and representatives of the three bodies, dubbed the ‘troika,’ said Tuesday they were recommending the next disbursement, worth euro9 billion, go ahead.

“Our overall assessment of the programme is that the programme is broadly on track,” said the European Commission’s Servaas Deroose. “Fiscal consolidation has been impressive and is progressing well. Nevertheless important challenges remain.”

The troika said Greece must make an “extra effort” to meet the target of reducing its deficit to 7.5 per cent of gross domestic product in 2011, from the 15.4 per cent it stood at last year. The 2009 deficit was revised upwards earlier this month, from the previous figure of 13.6 per cent.

They said the government has also agreed to take new measures to broaden its tax base and eliminate wasteful spending, particularly in health care spending, loss-making state companies and tax administration, which has struggled to collect enough taxes.

Greece has performed better than expected in state spending cuts, which have offset problems in revenue and other areas.

The IMF said this has to change.

“So far the government has been able to offset these shortfalls by underspending at a state level, that’s why the overall targets are still being met. That’s clearly not a sustainable strategy going forward,” Thomsen said. “We cannot keep on just cutting at a state level to offset the lack of control in other areas.”

Thomsen said long-term sustainability hinged on improving tax collection and comprehensive health spending reform — while maintaining an “efficient” health system. The changes were necessary both for economic reasons and to maintain “social fairness,” as much of the burden of the government’s austerity program has been borne by pensioners and wage earners so far, he said.

Reforms that must be taken include opening up closed professions, services and trades, privatizing state assents, cutting red tape and reforming collective wage agreements.

“The programme is off to an impressive start but it is also at a crossroads,” Thomsen said. “The sustainability of achievements to date will only be maintained if there is a very determined effort to move on structural reform.”

Greek labor unions have protested the austerity programme with a string of strikes. Mounds of uncollected rubbish have piled up on Athens streets due to a five-day municipal workers’ strike, while seamen extended a 24-hour strike for another two days, meaning all ferries will remain confined to port through Thursday.