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Ireland open to idea of growth-linked bonds for Greece

* Noonan says Greece needs to find "middle road" in talks

* Sees issues around growth-linked bonds but not opposed (Adds Noonan quotes from TV interview, detail)

By Andy Bruce and Marius Zaharia

LONDON, Feb 25 (Reuters) - Ireland (Other OTC: IRLD - news) has no problem in principle with the idea of swapping Greece's official debt for growth-linked bonds but would have to see the details of any proposal, Finance Minister Michael Noonan said on Wednesday.

Euro zone finance ministers agreed on Tuesday to a four-month extension of Greece's EU/IMF bailout programme, subject to its economic plans being approved in detail with discussions set to start immediately on filling the state's funding gap.

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One long-term option Athens has suggested is swapping debt held by its euro zone creditors for bonds with payments linked to economic growth, a plan that got a cool reception in European capitals earlier this month.

"There are issues around it, but I wouldn't say no in principle," Noonan said, answering questions about growth-indexed bonds after a speech in London. "But there's a lot of details to be filled in before we could say yes or no."

Noonan added that these bonds could present a "grave temptation" to underplay growth if doing so eased the debt burden by not declaring the full strength of economic expansion.

Noonan was among the most critical euro zone finance ministers of Greece's approach during often ill-tempered talks in Brussels last week, saying Greece's banking system would have collapsed within days had Athens not compromised significantly and struck a funding agreement.

Ireland embraced public spending cuts and tax hikes after following Greece into a similar bailout in 2010 and with its economy now recovering, Dublin is keen Athens does not win vastly different concessions to those it won through long negotiation.

Noonan said in the talks to come, states including Spain and Portugal, who were also in international aid programmes, would strongly advocate a constructive way of solving Greece's difficulties, rather than demanding "the nuclear option of writing off debt or not continuing in the euro zone".

"There is a middle road and it's along the lines of what we did in Ireland, you negotiate to make your debt more sustainable even without getting debt write-offs," Noonan said in an interview on Bloomberg television.

"And it involves increasing maturities, maybe parking debt for some period of time as the Greeks have done already. So, a combination of issues." (Additional reporting by Conor Humphries in Dublin; Writing by Padraic Halpin, editing by Louise Ireland and Toby Chopra)