Germany's Schäuble: Greece Could Secure Bailout Deal in Late May

BARI, Italy--German Finance Minister Wolfgang Schäuble said Friday that Greece could secure a new bailout deal later in May, amid negotiations between Athens's financiers and an apparent softening of the International Monetary Fund's stance on debt relief.

"I am still in favor of getting a solution, at least a political solution, at the Eurogroup meeting," on May 22, Mr. Schäuble said as he headed into a meeting of Group of Seven finance chiefs here. "We are prepared to stick to what we agreed on May 2016...that is the basis on which we are working."

Previously, German officials have said there was nothing to discuss beyond last year's agreement, and anything else left to negotiate will have to wait until next year.

Meanwhile, a senior International Monetary Fund official signaled the shape of the developing political solution after talks between Greece's creditors ahead of the G-7 meeting Friday: The IMF appears willing to compromise on debt-relief terms, but is still seeking to secure what it says are more credible economic targets.

"There is not enough clarity yet," IMF Managing Director Christine Lagarde told reporters on the sidelines of the G-7 meeting. "Our European partners need to be more specific in terms of debt relief, which is an imperative."

European markets have shown renewed optimism Greece might win another round of long-sought emergency financing, including a promise of debt relief, in the coming weeks.

Europe and the IMF have declared Greece's economic reforms sufficient for further bailout cash. But the IMF says it can't join in with new financing without a vow by Europe to give Athens debt relief, a term powerhouse Germany has so far been reluctant to give. Greek officials say the principals are near to a political compromise that will secure the debt-burdened country cash in time to pay off several big bills coming due in June and July.

Without emergency cash, Athens risks default, renewed financial turmoil for European and global markets, and a revival of the Greek euro-exit threat.

The IMF, which Berlin wants on board to win voter support for more Greek bailout money, says it is still wrangling with Athens's creditors over the terms.

"We certainly have made some progress," a senior IMF official said Friday. "But still we need more realism in the assumptions and we need more specificity about the debt relief."

The IMF says Europe is being far too optimistic about the Greek economy's ability to grow in the coming years, and its ability to sustain a large budget surplus for a long time. The fund says Athens will reach a budget surplus of 3.5% of gross domestic product by 2019 and will have to reduce that target "very soon" afterward. Berlin wants a much longer period of sustained budget surpluses, reducing the need for debt relief.

The IMF is willing to forgo exact debt-relief details from Greece's European creditors, but wants at least a commitment to the scope of debt relief under consideration.

European officials must offer "a range" of maturity extensions--how far into the future Greece's debt obligations will be pushed--the IMF official said.

The IMF also appears to be willing to compromise on a key phrase used in past European commitments that allowed them to put off giving Greece debt relief by saying they would only restructure Athens debt "if necessary."

Previously, the IMF said it required "concrete" commitments from Europe to rejoin a Greek bailout.

On Friday, the IMF official said, "We can go to the board" if the Europeans show they "will be willing to consider measures that go well beyond what has been on the table so far."

The commitment has to be credible enough, however, that markets believe the strategy has broad support among the creditors, the official said.

If past political agreements between Greece and Europe are any measure, however, a Eurogroup bailout deal in May might temporarily revive Greece's economic prospects, but require more external help down the road.

Write to Ian Talley at ian.talley@wsj.com

BARI, Italy -- German Finance Minister Wolfgang Schäuble said Friday that Greece could secure a new bailout deal later in May, amid negotiations between Athens's financiers and an apparent softening of the International Monetary Fund's stance on debt relief.