Greece will try to raise €3.1-billion in an auction of three-month treasury bills next week to try to avoid a looming cash crunch, a finance ministry official said on Friday.
"This is to cover the country's current needs and avoid finding ourselves in a dead-end," the official said as the government finds itself in great need of cash to pay salaries and pensions and faces redeeming a €3.2-billion bond held by the European Central Bank on Aug. 20.
While Greece has been shut out of the long-term debt markets since 2010, it has regularly issued short-term debt, although the Tuesday auction dwarfs previous placements.
Greece raised €812.5-million on Tuesday in an auction of six-month treasury bills, paying a slightly lower rate of 4.68 per cent.
In its last three-month treasury bill sale, on July 17, Greece raised €1.6-billion at a slightly lower rate of 4.28 per cent.
EU-IMF bailout loans are supposed to keep the government solvent, but a two-month political deadlock after back-to-back elections in May and June put its reform program off track, and the next instalment of some €31.5-billion in funds is now not expected before October.
Greek officials hope a deal can be found to postpone redemption of the bond.
"The government hopes that a solution will be reached at a European level," the finance ministry official said.
Jean-Claude Juncker, head of the eurozone finance ministers group, who is set to visit Athens on Aug. 22, indicated recently in Brussels that a solution should be possible on the ECB-held bond.