ATHENS: Greece is leaning towards issuing T-bills to plug a cash squeeze this month as resumption of its bailout funding hinges on a positive assessment by European Union and IMF inspectors, its deputy finance minister told today's Kathimerini newspaper.

Cash-strapped and behind targets agreed under a 130 billion euro ($160.4bn) financial rescue package, Athens faces a 3.2bn euro bond maturity on August 20.

"The situation (with cash reserves) is borderline and will remain so until September when the (EU/IMF/ECB) report will be concluded," Deputy Finance Minister Christos Staikouras told the paper in an interview.

"We are managing cash reserves carefully and exploring several solutions, such as an increase in the issuance of T-bills. We will choose the optimal solution in agreement with our partners," he said.

Shut out of bond markets, Greece issues T-bills on a monthly basis to refund maturing short-term paper. It needs to roll over 2.6bn euros of six- and three-month T-bills this month.

German newspaper Die Welt said yesterday the European Central Bank agreed on Thursday to raise the upper limit of T-bills the Bank of Greece can accept in exchange for emergency loans.

Staikouras said the government was finalising an 11.6bn euro package of spending cuts to bring the bailout programme back on track, hoping a positive report by the so-called troika of inspectors will release the next aid payment.

The troika will meet with Finance Minister Yannis Stournaras today. Athens is keen to convince its international lenders it will stick to the prescribed economic adjustment plan before asking for any break such as more time to apply the austerity measures.

"The more credible we are in attaining goals and commitments, the more room we will have to seek amendments to the pursued support programme," Staikouras told the paper.