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Greece's €130bn bailout must be renegotiated, says senior official

Greece and its international lenders will renegotiate the programme on which its second financial bailout is based because circumstances have changed, a senior eurozone official has said.

Greece secured a second, €130bn (£105bn) bailout package in February from Europe and the International Monetary Fund, but an inconclusive general election in May and a return to the ballot box last Sunday delayed the implementation of the conditions attached to the bailout.

Greek parties are currently in talks to create a coalition government with a mandate to renegotiate the terms of the bailout, which has staved off national bankruptcy, but at the cost of deeply unpopular austerity measures.

The United States, the largest IMF member, said it supported discussions to review the Greek bailout programme, but German Chancellor Angela Merkel has said that loosening Greece's reform promises would be unacceptable.

"Anybody who would say that we need not, and cannot renegotiate the MoU (memo of understanding) is delusional, because he, or she, would be under the understanding that the whole process has remained completely on track ever since the weeks before the Greek first election," the official said.

"Because the economic situation has changed, the situation of tax receipts has changed, the rhythm of implementation has changed, the rhythm of privatisation has changed, if we were not to change the MoU, it does not work," he said.