Cash-strapped and behind targets agreed under a 130 billion euro ($160.4 billion) financial rescue package, Athens faces a 3.2 billion 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 2.6 billion euros of six- and three-month T-bills this month.

German newspaper Die Welt said on Saturday 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 finalizing an 11.6 billion euro package of spending cuts to bring the bailout program 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 on Sunday. 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 program," Staikouras told the paper.

Greece has narrowly dodged bankruptcy several times before, with the government carrying out a juggling act, holding off from paying some suppliers until the next tranche of aid from lenders arrives.

Staikouras said the three-party coalition government is trying to avoid a euro zone exit and striving to achieve a favorable outcome.

"The good scenario we expect to make happen is getting a positive report from our partners, conclude the recapitalization of banks, achieve an extension of the fiscal adjustment and see the economy recover," Staikouras said.

($1 = 0.8104 euros)

(Reporting by George Georgiopoulos)

• A Permanent Economic Emergency