ATHENS  - The International Monetary Fund has given approval for discussions on new rescue loans to Greece, the Greek finance minister said Thursday as the country held crucial debt-cutting talks.

"After a waiting period of several weeks, the green light has been given for the country to submit to the IMF a request to begin procedures for the new programme," Finance Minister Evangelos Venizelos told parliament.

"At an unofficial meeting of the IMF governing board yesterday in Washington, IMF members were given approval to begin talks with the Greek government on the new programme," the minister said.

On Wednesday, the IMF said it would seek up to $500 billion (391 billion euros) in new funds to prevent the European debt crisis from threatening the global economy.

Japan said it was ready to help out, but the United States has resisted calls for a larger IMF stand-by fund, and its success will hinge on the attitude of emerging economies like China, Brazil and India.

Meanwhile Greece pushed ahead with critical negotiations with private creditors to cut nearly one third of its crushing debt, which would help unlock new eurozone loans before Athens runs out of money in March.

The discussions with the Institute of International Finance (IIF), which is leading talks on behalf of private creditors, are aimed at cutting about 100 billion euros ($128 billion) off Greece's total debt of more than 350 billion euros.

Venizelos on Thursday said Greece wanted a "radical and generous" debt cut of a voluntary nature, but noted that all bondholders had to participate for the operation to produce a 50-percent writedown.

"It must be of a voluntary nature, and lead to complete participation, namely 100 percent participation," the minister said.

Hedge funds holding Greek debt have resisted the writedown however, with an eye on a 14.4-billion-euro Greek bond that matures on March 20.

Greece has warned that it could pass legislation to force collective action on holdouts, a move that could enable unwilling bond holders to claim default compensation from Athens.

"It is something that has to be considered in the light of expectations about the degree of the participation to be achieved," Prime Minister Lucas Papademos told the New York Times in an interview published on Wednesday.

An agreement with banks and other institutional investors would open the way for a separate 130-billion-euro loan deal with the eurozone and help calm market fears of a wider crisis within the 17-nation single currency area.

It would also allow Greece to start planning elections to replace its current caretaker government, with Papademos pointing to possible early elections "sometime in April" if the debt deal and a second bailout are concluded.

In Paris, a banking source told AFP the banking sector regulator ACP would require banks to take bigger provisions against potential losses from holdings of Greek public debt.

Their current level is 60 percent, but a note from Dutch bank ING said: "Latest soundings point to a likely 68 percent haircut deal for Greek government bonds."