Greece needs to improve the efficiency of its public sector dramatically to meet fiscal targets and avoid new austerity measures, the International Monetary Fund said on Tuesday.
It cautioned that reform fatigue had set in among the ruling coalition.
"Adjustment fatigue has set in and the coalition government has a reduced majority of just two seats in the 300-member parliament," the IMF said in its latest review of Greece's progress under its 240-billion-euro bailout.
"This is making it difficult to move forward boldly and swiftly with needed reforms."
Greece's reform record has been patchy since the start of its EU/IMF bailout in mid-2010, and has often led to delays in the disbursement of rescue funds.
The IMF warned the country's public debt remained "very high", adding that EU help was essential to make it sustainable. Greece is expected to begin talks for further debt relief from its European partners later this year.
"With debt projected to exceed the targeted path, it is ... essential that Greece's European partners reaffirm their commitments to the agreed debt strategy by standing ready to provide the additional relief needed to keep debt on this path," the IMF said.
Without further debt relief or additional bond issues, Greece will face a funding gap of 12.6 billion euros after May 2015, the IMF said. It also projected Greece falling short of its 2015 budget surplus target by about 2 billion euros in 2015, or about 1 percent of gross domestic product.
The IMF expects Greek debt to peak at 174 percent of GDP this year before declining to 128 percent in 2020 and 117 percent in 2022. The European Commission puts it at about 125 percent of gross domestic product in 2020 and at about 112 percent in 2022.
Prime Minister Antonis Samaras has sought to show that his government will continue a reform drive despite defeat in Greece's EU election last month, naming a reforms-minded economist as finance minister on Monday. [Reuters]