Reuters International

Greek Prime Minister Alexis Tsipras addresses his lawmakers during a ruling Syriza party parliamentary group session in Athens, Greece, May 6, 2016. REUTERS/Alkis Konstantinidis

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ATHENS (Reuters) - Greece's parliament will vote on a new package of tax hikes and reforms demanded by its international lenders on Sunday, two days before euro zone finance ministers assess whether Athens qualifies for much-needed bailout loans.

The bill would increase value added tax by 1 percentage point to 24 percent, raise tax on fuel, tobacco and alcohol, liberalise the sale of banks' non-performing loans and detail the set-up a new privatisation fund, government officials said.

It will also include details on a contingency mechanism to impose tighter austerity measures, which will be activated only if Greece misses its fiscal targets, the officials said on Monday.

The vote is expected to test Prime Minister Alexis Tsipras' left-led government, which has a thin majority of 153 lawmakers in the 300-seat parliament. Athens says that if activated, the contingency measures will not hurt the poor.

Passing the reforms before the Eurogroup meeting on May 24, is a demand of international lenders to wrap up the review which will unlock the next tranche of funds that Athens will use to pay IMF loans, state arrears and ECB bonds maturing in July.

Talks between Greece and the lenders -- the European Stability Mechanism, European Commission, European Central Bank and the International Monetary Fund -- over the reforms have dragged on for months.

The delays have been mainly due to a rift between EU and IMF lenders over Greece's fiscal progress and the sustainability of its debt. The IMF believes that without debt relief or additional measures Athens will miss a bailout targets for 3.5 percent of GDP primary surplus in 2018.

Euro zone finance ministers have offered to grant Greece debt relief if the country delivers on all reforms agreed under its latest bailout.

Athens, which aims to tap markets in 2017, hopes that substantial debt relief will help attract investors and convince Greeks that their sacrifices are paying off after seven years of belt-tightening.

The conclusion of the review will also lead to the reinstatement of the European Central Bank's waiver for the country's banks. The ECB ditched its waiver on a minimum credit rating requirement on Greek debt last year, cutting off Greek banks from cheap lending.

(Reporting by Renee Maltezou and Lefteris Papadimas; Editing by Alison Williams)

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