Euro zone on track for decision on Greece on November 12

European Economic and Monetary Affairs Commssioner Olli Rehn speaks to journalists during the EU Informal Economic and Financial Affairs Council (ECOFIN) Meeting in Nicosia, Cyprus September 15, 2012.

MEXICO CITY (Reuters) - - International lenders and Greece are on track to reach a deal to unfreeze emergency lending to Athens at a meeting of euro zone finance ministers on November 12, EU Economic and Monetary Affairs Commissioner Olli Rehn said on Monday.

Highly indebted Greece has fallen behind with reforms and fiscal consolidation demanded by the International Monetary Fund and euro zone countries in exchange for new loans, because of two rounds of elections and a deeper-than-expected recession.

Athens expects its debt to GDP ratio to reach almost 190 percent next year while euro zone and IMF officials believe it can only be sustainable if brought down to around 120 percent.

A senior EU official, speaking on condition of anonymity, cast doubt on Monday if a deal on Greece could be struck next week, because of there was no agreement yet on how to cut Greek debt. Even if there were agreement, several countries, including Germany, still had to discuss the matter with their parliaments.

But Rehn said a deal would be struck next Monday, when euro zone ministers, called the Eurogroup, meet in Brussels.

"We need to have a common view on how to reduce the debt burden by the November 12 Eurogroup meeting and I am confident that we will be able to reach that common view," Rehn told a news conference after a meeting of finance officials from the G20 countries.

Progress, however, depended on good will of Greece too.

"In parallel, or, in fact, prior to that, the Greek government is first expected to adopt a fiscal package of structural reforms and then the Greek parliament is asked to endorse this package as prior actions so we can proceed towards a decision next Monday," Rehn said.

"We are on track to take the decision on the 12th of November but it will require quite some work still from everybody including the Greek parliament, including the EU and IMF representatives," he said.

One of options to reduce the debt pile in Greece could be for Athens to borrow money from the euro zone and buy back its bonds at the deep discounts they now trade at.

Other possibilities include lower interest on existing loans, lengthening their maturities and grace periods of interest servicing as well as the European Central Bank foregoing profits it may make on the Greek bond portfolio it holds.

Asked if a debt buy-back was the preferred option, Rehn said:

"I would expect that we need a combination of elements and I would certainly not rule out the issue of a debt buy-back but it's still a bit premature to say anything definitely on this matter."

(Reporting by Jan Strupczewski and Krista Hughes; Editing by M.D. Golan)