* IIF says Greece needs lenience from "troika"
* Also suggests ECB should buy Portuguese, Irish bonds
By Anna Yukhananov
WASHINGTON, Oct 4 (Reuters) - The head of a global bank lobby urged Greece's foreign official lenders on Thursday to lower the interest rates they charge the indebted European country to help it pull out of recession.
Charles Dallara, the managing director of the Institute of International Finance, said Greece would be unable to rein in its sky-rocketing budget deficit without economic growth and needed more lenience from its "troika" of international lenders.
Earlier this year, Dallara spent months in Athens negotiating the largest-ever sovereign debt restructuring on behalf of private sector holders of Greek bonds. Under the final agreement, bondholders who signed up for a swap halved the nominal value of their holdings.
"The private sector has wiped out huge amounts of claims (on Greece)," he told reporters at the IIF's Washington headquarters. "There is no reason why the euro zone needs to continue to charge Greece the rates it is charging."
The "troika" - the European Union, European Central Bank and International Monetary Fund - agreed to give Greece a 130 billion euro ($170 billion) r e scue loan to meet expenses and address it s debt crisis, as long as the country commits to cutting its debt to under 120 percent of national income by 2020.
But the trio fear some of Greece's proposed savings might fail to materialize and have not yet signed off on Greece's most recent austerity package, even as the country is set to enter a sixth year of recession.
The IMF has also floated the idea of restructuring some of the debt to help Greece meet its targets. But taking losses on Greek government bonds would be uncomfortable for European officials, who already face an electoral backlash over bailouts and austerity budgets.
Dallara said large-scale debt restructuring is not productive or necessary.
"What we would encourage is a greater willingness on the part of the eurozone lenders, and I would even suggest the IMF ... to meaningfully reduce the interest rates on the loans that are currently outstanding," he said.
He suggested a target of 0.8 percent on official loans, below the 4 percent initially assumed.
Dallara also said the EU/IMF lenders should give Greece more time to pay off its loans, as the country has been asking, and focus on longer-term structural reforms such as privatization and labor market changes, instead of short-term budget cutting.
The IIF also suggested the European Central Bank should consider buying the debt of Ireland and Portugal, which also received bailouts, to help them return to markets more quickly.
The ECB has said it would not buy the bonds of bailed-out countries until they have full access to markets to avoid becoming a replacement for those markets.
"The euro zone desperately needs some success stories and they have two almost in front of them," said IIF chief economist Philip Suttle, referring to Portugal and Ireland. "And they may just need a little help to get over the last hurdle."
($1 = 0.7689 Euro) (Editing by Andre Grenon)
Keywords: GREECE DEBT/BANKS