Greece may issue more T-bills to cover funding gap

Greece is considering issuing more treasury bills in August as one of the options to cover a funding squeeze this month, a senior finance ministry official told Reuters on Wednesday.

Cash-strapped Greece is due to run out of cash within weeks if it does not get the next aid installment from its international lenders. It also needs to repay a 3.2 billion euro bond maturing on Aug. 20.

The European Union and International Monetary have promised the country will be funded through August but the details of the funding have yet to be disclosed.

"One of the alternatives being considered is the higher T-bills," the official said, speaking on condition of anonymity. "We are discussing the issue with our partners. A final decision has not been made."

Greece has fallen behind targets agreed as conditions of its 130 billion euro bailout deal, mainly due to three months of political uncertainty as it struggled to form a government after two inconclusive elections in May and June.

Another option for seeing it through until crunch meetings with other EU leaders in September would be a bridge loan from its lenders, a finance ministry source told Reuters last month.

Deputy Finance Minister Christos Staikouras sounded alarm bells on Tuesday on how Athens would pay public service wages, pensions and other every day expenses, telling state TV that Greece's cash reserves are almost empty.

The daily Kathimerini said Greece's PDMA debt agency has decided to issue 6 billion euros in T-bills in August, up from about 3-4 billion euros Athens auctions every month.

Monthly T-bill sales are Greece's sole source of market funding but Greece's second EU/IMF bailout plan approved in March hopes to reduce the country's reliance on T-bills.