Greece to issue new debt ahead of crisis talks

Beleaguered Greece was in crisis talks with its EU-IMF creditors for a second day on Tuesday as it prepared to auction more debt and sought to secure loan funds to avert bankruptcy next month.

Finance Minister Evangelos Venizelos will hold a conference call with head auditors from the EU, IMF and European Central Bank at 1600 GMT, with debt-hit Athens under pressure to tighten austerity and speed up asset sales.

Also on Tuesday, the Greek debt management agency will attempt to raise 1.25 billion euros ($1.7 billion) in a sale of three-month treasury bills to bring some badly-needed cash into the country’s coffers.

Unless Athens can come to an arrangement with the ‘troika’ of creditors, its reserves to pay pensions and wages will run out in October. The first round of talks with the head auditors on Monday was “productive and substantive,” the finance ministry said in an emailed statement.

The audit had been suspended in early September, with sources close to the mission citing lack of progress in reform and placing the release of an eight-billion-euro loan slice at risk.

Greece is under pressure to plug a budget hole of more than 2.0 billion euros ($2.8 billion) under the terms of a 110-billion-euro EU-IMF bailout contracted last year. The government last week announced a new hefty property tax and is expected to make further cuts in the country’s massive state payroll after the finance minister admitted there was “surplus” staff in the civil service. And a Greek daily reported on its website late Monday that Prime Minister George Papandreou was considering calling for a referendum on whether Greece should continue to tackle its debt crisis within the eurozone or by exiting the single currency.

The International Monetary Fund has criticised Greece for wasting time and falling behind target with a long-delayed asset sale, while the European Commission is urging Athens to implement the necessary budget cuts and reforms.