UPDATE 1-EU says Greek aid could be split into instalments
* EU's Rehn says possible to split 8.1 bln euro tranche
* Euro zone finance ministers to tackle issue on Monday
* Payment delay risks stifling Greek economy
MIKKELI, Finland, July 5 (Reuters) - The next tranche of international aid for Greece could be split into instalments, the EU's top economic official said on Friday, holding out the prospect of a continued hand-to-mouth existence for Greece that threatens to stifle its economy.
Athens had hoped that euro zone finance ministers would sign off on the next 8.1 billion euro tranche of aid when they meet on Monday, although Greek officials have conceded that Greece would not meet targets on reforming its public sector by an end-of-week deadline set by international lenders.
On Friday, however, Olli Rehn, the European commissioner in charge of economic and monetary affairs, confirmed what many officials have expressed privately amid growing frustration with Athens' slow pace of reform, namely, that the tranche could be split into several instalments.
"It is possible, but not certain," Rehn told a seminar in his hometown of Mikkeli, Finland, when asked about the issue. "It all depends on whether Greece can meet all requirements that they are committed to."
He said that talks involving the International Monetary Fund, the European Commission and the European Central Bank, which make up the troika that supervises Greece, would "continue as long as needed".
The euro fell slightly against the U.S. dollar on Rehn's comments to 1.288.
Greece has been kept afloat by emergency loans alone since May 2010, a few months after the start of a debt crisis that sent shockwaves through the euro zone and threatened to push Greece out of the common currency.
The latest instalment is one of the last big cash injections that twice bailed-out Athens stands to receive as part of a 240-billion-euro rescue package that expires at the end of 2014. It needs the money in part to redeem about 2.2 billion euros of bonds in August.
But public sector layoffs, which must be implemented alongside state privatisations as a condition of receiving aid, are an incendiary issue in Greece, which is struggling through a sixth year of recession and record high unemployment.