Eurozone finance ministers are considering allowing Athens to buy back up to 40 billion euros of its own bonds at a discount as one of a number of measures to cut Greek debt to 120 percent of GDP within the next eight years.

Under a proposal discussed by ministers, Greece would offer private-sector bondholders around 30 cents for every euro of Greek debt they hold, allowing Athens to pay down some of its vast outstanding obligations, a senior official involved in the discussions told Reuters.

Greek debt is trading at 20-30 cents on the euro depending on its maturity, but is likely to strengthen if the buy-back

plan is confirmed, meaning any offer will have diminishing marginal returns.

The ministers, who failed to reach agreement last week, have also discussed granting Greece a 10-year moratorium on paying interest on about 130 billion euros of loans from the euro zone's emergency fund, which could save Athens around 44 billion euros over a decade, the official said.

There is also the possibility of reducing the interest rate on loans made by euro zone countries directly to Greece in 2010, from 1.5 percent to just 0.25 percent, although the official said Germany was opposed to such a step.

The range of options on the table underscored the determination to find a solution to Greece's debt problems

nearly three years after they were first exposed, leading to contagion across the eurozone.

However, while some such as the debt buy-back have significant backing, others face opposition from one or more

euro zone countries and the official emphasised that the ground could shift rapidly.

As well as the 17 euro zone finance ministers, the meeting was attended by IMF Managing Director Christine Lagarde and by European Central Bank President Mario Draghi.

The IMF, which has participated with the euro zone in two bailouts of Greece since 2010, has said that Greek debt must be reduced to 120 percent of GDP by 2020 if it is to be sustainable in the long-run. If that isn't possible, there is a risk that the IMF will have to withdraw from efforts to stabilise Greece.

At a meeting a week ago, there were sharp differences between the EU and IMF, with Juncker saying Greek debt should be cut to that target only by 2022. Lagarde said that would be unacceptable.

On Tuesday, officials began by agreeing that the aim was to cut the debt to 120 percent by 2020, the senior official told

Reuters. But it remains uncertain just what mix of measures will achieve that goal.

Under current projections, Greek debt is expected to be about 145 percent in eight years' time, meaning measures

totalling around 25 percentage points of GDP, or 50 billion euros, are needed to get Greece back on track.

Pressure for the euro zone to come up with a solution is high not just because Greece is running out of money and

financial markets want a dependable solution, but because Greece has taken virtually all the steps demanded of it to cut spending, raise taxes and overhaul its economy.

[Reuters]