ATHENS—Greece is arguing with its international creditors about a few small but politically sensitive measures creditors want implemented before they release some €7.5 billion ($8.4 billion) of badly needed bailout funds.

A teleconference between Greek officials and representatives of the country's lenders failed on Sunday to reach agreement on whether and how Greece should amend recent legislation to comply with the conditions of its bailout program.

Creditors, represented by the European Commission, other eurozone institutions, and the International Monetary Fund, say Greece must make specific changes to recent laws on areas including banking regulation, retiree benefits, and privatization. But Greek Finance Minister Euclid Tsakalotos has written a letter to the commission, the IMF and the European Central Bank saying his government can't carry out all of the lenders' demands, according to Greek officials, citing political obstacles.

Greece needs its bailout funding by mid-July at the latest, when it must repay heavy debts, including bonds held by the ECB. Considering the amount of legislation that has already passed, it is unlikely the deal would be scuttled over the issues.

The government, however, was hoping to reach agreement with lenders by Wednesday, when the ECB's governing council is due to meet.

Athens wants the ECB to once again accept Greek government bonds as collateral when it lends money to banks—a move that would boost Greek banks' access to cheap liquidity and, indirectly, the Greek economy. But the ECB isn't expected to take this step until the remaining disputes over Greece's bailout compliance are resolved.

Last week, eurozone finance ministers and the IMF struck a deal that put aside for a while their differences over how to manage Greece's debt burden. But first, creditors decided, Greece must deliver fully on its policy promises under the bailout.

Among other items, lenders want Greece to free up the sale by banks of soured loans backed by state guarantees. Athens wants to temporarily exempt this category from a broader sale of banks' bad loans.

Creditors are also sparring with the government over a special benefit for low-income pensions known as EKAS, which Greece has promised to scrap. Prime Minister Alexis Tsipras said in parliament last week that he won't ask pensioners to repay the EKAS benefits they have already received this year. But creditors want that decision reversed, saying it creates a budget gap of around €100 million.

Lenders also want Greece to change a new law that sets up a state privatization and investment fund to give the fund's managers more legal protection against being prosecuted over controversial deals.

The demand follows the recent prosecution of advisers at Greece's existing privatization authority over the sale and lease-back in 2014 of 28 state properties. Prosecutors allege the deal harmed the Greek state's interests. Creditors also want these advisers to be protected against pros.

A further sticking point concerns a two-year pay-and-promotion freeze for some state employees including soldiers, police officers, judges and diplomats. The freeze was previously agreed to but has since been challenged by some within the Greek ruling coalition.

The government said the measures will go through unless Greece's Defense Ministry presents by the end of the year equivalent measures that could cover that gap. But creditors want the measure implemented without the provision.

Viktoria Dendrinou in Brussels contributed to this article.

(END) Dow Jones Newswires

May 30, 2016 21:35 ET (01:35 GMT)