Ahead of IMF checkup, Greece raises $2.53 billion in second debt sale

Ahead of IMF visit, Greece holds second debt sale

ATHENS, Greece — Greece raised €1.95 billion ($2.53 billion) in a debt auction Tuesday, passing its second market test in a week ahead of a key fiscal checkup by the European Union and International Monetary Fund.

The country’s Public Debt Management Agency said the sale of 13-week treasury bills — originally for €1.5 billion — was oversubscribed by 3.85 times at an interest rate of 4.05 percent, higher than the 3.65 percent it had to pay for an April issue of such bills.

The sale came a week after Greece tapped the market for the first time since receiving joint EU and IMF rescue loans, selling €1.625 billion in 26-week bills at a 4.65 percent yield.

Debt-ridden Greece narrowly avoided bankruptcy in May and was pledged up to €110 billion in rescue loans from the IMF and the 15 other EU countries using the euro.

In an interim report Friday, the IMF cited progress in Greece’s ambitious rescue reforms. But inspectors from the Fund, the EU and European central Bank are due back in Athens on Monday for a fiscal inspection required before Greece gets its second loan installment in mid-September.

Athens secured the loans after imposing tough austerity measures, slashing civil service pay and overhauling of its pension and labor systems.

Angry unions responded with a series of strikes and protests. Doctors at state-run hospitals are on a five-day strike through Friday to protest plans to revamp the National Health Service.

The Finance Ministry insists the cuts are working, and on Tuesday reported that its effort to slash the country’s budget deficit from 13.6 percent of gross domestic product in 2009 to 8.1 percent remains on track.

It said the state deficit for the first six months of 2010 at €9.75 billion, against €17.87 billion for that period in 2009 — a 45.4 percent year-over-year decline, that remains ahead of the 39.5 percent annual target.

Ministry officials maintain that its 2010 prediction of a 4 percent contraction in Greek economic output now seems too severe.

But that optimism has been cooled by a steady stream of dismal financial data. Industrial orders were down 1.5 percent on the year in May, the country’s statistics agency said Tuesday.

And hopes that Europe’s financial recovery will buoy Greece’s vital tourism industry were dented by a 5.3 percent drop in overseas tourist arrivals in the first quarter.

Tourism industry leaders say Greece’s frequent strikes and demonstrations have dented early holiday bookings this summer.

Associated Press writer Elena Becatoros contributed to this story.