IMF's Lagarde says important for euro zone to forge deal on Greece

International Monetary Fund Managing Director Christine Lagarde gestures as she answers questions during a news briefing at the presidential palace in Manila November 16, 2012.

MANILA (Reuters) - A crucial Eurogroup meeting next week on Greece should forge a deal that will put the insolvent country's economy on a sustainable path, International Monetary Fund (IMF) Managing Director Christine Lagarde said on Friday.

The IMF chief is cutting short her tour of Asia to attend the Eurogroup meeting in Brussels on November 20.

A row between euro zone governments and the IMF over how to make Greece's giant debt mountain manageable is holding up the release of 31 billion euros ($39.5 billion) in emergency loans needed to keep Athens afloat.

"It is not over until the fat lady sings as the saying goes," Lagarde told reporters when asked by reporters in Manila about the possibility of a deal on Greece next week.

"It is a question of working hard, putting our mind to it, making sure that we focus on the same objective which is that the country in particular, Greece, can operate on a sustainable basis, can recover, can get back on its feet, can reaccess markets as early as possible."

Lagarde earlier this week publicly disagreed with euro zone finance ministers who have suggested that Greece should be given until 2022 to lower its debt to gross domestic product (GDP) ratio to 120 percent. Lagarde has insisted the existing target of 2020 should remain.

European policymakers must also implement policy commitments to help lift the euro zone economy next year, Lagarde said in Manila.

Banks, insurers and other private sector investors holding about 206 billion euros of Greek bonds took a 53.5 percent reduction on the nominal value of their securities earlier this year.

Greece's total debt is forecast to rise to nearly 190 percent of gross domestic product next year, meaning it is highly unlikely to fall back to 120 percent of GDP by 2020, the level the IMF has said is the maximum sustainable in the long term.

(Reporting by Karen Lema and Lesley Wroughton; Editing by Simon Cameron-Moore)