By Andrew Torchia
DUBAI (Reuters) - The International Monetary Fund is doing the best it can to agree on bailout loans for Greece but cannot compromise its principles and cut a sweetheart deal for the country, IMF Managing Director Christine Lagarde said on Monday.
She said, however, that a reduction in Greece's debt load could occur without international lenders having to take write-downs of their loans - an issue of specific concern to European Union creditors.
Greece, the IMF and official European creditors are locked in a review of the country's bailout program and need an agreement to permit new loan disbursements and save Athens from default.
The three parties have had sharp disagreements, however, on what reforms Greece needs to make and its fiscal targets. The IMF has said it cannot participate in a program which could keep Greece in a never-ending cycle of indebtedness.
European Commission President Jean-Claude Juncker said at the weekend that the bailout was "on shaky ground" because the IMF had not decided what role it would play, while Greek Prime Minister Alexis Tsipras accused the IMF of being "cowardly" and making "new demands for Greece".
In an interview with Reuters during a visit to Dubai, Lagarde responded to those criticisms by saying the IMF was actively trying to resolve the disputes but had limited room for maneuver.
"We have been asked to help, but can only help at terms and conditions that are even-handed. In other words we cannot cut a special sweet deal for a particular country because it is that country," she said.
She added: "We need to apply the principles that we apply to all countries because we are lending international community money."
The IMF has been pushing for Greece to enact long-term reforms of its income tax and pension systems to avoid deficits.
It has also suggested Greece's official creditors may need to take "haircuts" - outright write-downs of their loans - an idea which has been opposed in European capitals such as Berlin.
Lagarde said on Monday, however, that it might still be possible to make Greece's debt sustainable without haircuts, though she did not give details of this strategy.
"The Europeans have extended very long-term facilities at low interest rates. They have recently proposed a few measures to lower even further the burden of the debt," she said.
"More needs to be done and we believe it can be captured within a mechanism that will not require actual haircuts, provided that the reforms that I just mentioned are actually delivered upon by Greece."
(Reporting by Andrew Torchia Editing by Jeremy Gaunt)