Euro zone finance ministers agreed on Monday that they would seek voluntary rollover of Greek debt by private bondholders to finance a substantial part of Greek funding needs in coming years.

The agreement means a German idea of Greek bond swaps has been dropped.

Ministers agreed that the required additional funding will be financed through both official and private sources and welcome the pursuit of voluntary private sector involvement in the form of informal and voluntary roll-overs of existing Greek debt at maturity for a substantial reduction of the required year-by-year funding within the programme, while avoiding a selective default for Greece, the ministers said in a statement after a meeting in Luxembourg.

The ministers noted, however, that Greek debt would only be sustainable if Athens delivered on its fiscal consolidation plans, raised 50 billion euros ($72 billion) from privatisation until 2015, and implemented structural reforms.

They said the disbursement of the next, 12 billion euro tranche of emergency funding to Greece would take place by mid-July, if the Greek parliament passed key laws on the fiscal strategy and privatisation.

(Reporting by John O'Donnell, writing by Jan Strupczewski, editing by Rex Merrifield)