By Renee Maltezou and Paul Taylor
BRUSSELS (Reuters) - Greece demanded on Monday that euro zone finance ministers acknowledge progress in fraught negotiations on a cash-for-reform deal, hoping to unlock short-term borrowing to ease its acute financing crunch.
However, sources familiar with European Central Bank thinking said there was still too little advance on key issues and too much uncertainty for the bank to allow the Greek government to sell more short-term Treasury bills.
Greece is due to make a crucial 750 million euro debt repayment to the International Monetary Fund on Tuesday and is running out of money to keep paying wages and pensions. But government spokesman Gabriel Sakellaridis told reporters Athens was not linking the IMF payment to the outcome of Monday's Eurogroup meeting or considering any "plan B".
"What it wants from today's Eurogroup is to have on record that considerable progress has been made in the talks," he said.
But Italian Economy Minister Pier Carlo Padoan said he did not believe ministers would make such a joint statement, although Eurogroup chairman Jeroen Dijsselbloem would hold his usual news conference after the meeting.
A senior EU official said negotiations had crept forward only slowly in the last week and there was no breakthrough on the central sticking points of pension and labor market reforms and budget targets for this year and next.
Slovakian Finance Minister Peter Kazimir summed up many ministers' frustration when he said in a tweet there had been improvements in the process but still no progress in substance, with wide gaps between what Greece says in Brussels and what it does in Athens.
Euro zone officials believe Greece has scraped together enough money, notably by commandeering cash reserves of local authorities and pension funds, to meet its payment obligations until the end of May.
They say the real deadline for a deal is end-May to enable parliamentary approval in some euro zone countries, notably Germany, in time to release the remaining 7.2 billion euros in bailout funds before the program expires at the end of June.
Elected in January on promises to end austerity and scrap an international bailout, the leftist-led government is refusing to agree to pension cuts, raise the retirement age, or ease layoffs in the private sector. It is also at odds with creditors on the primary budget surplus and on longer-term financing.
French Finance Minister Michel Sapin told reporters in Paris that Monday's Eurogroup meeting "will be important but not decisive. Things have progressed but are not ripe enough to allow to conclude this process."
Greek Finance Minister Yanis Varoufakis, sidelined from the conduct of the talks after he alienated fellow ministers with outspoken interviews and economics lectures, was due to meet his hardline German colleague, Wolfgang Schaeuble, just before the afternoon Eurogroup session.
Two-year Greek bond yields edged up above 20.8 percent on Monday as nervous investors weighed the risk of a default. Italian, Spanish and Portuguese bond yields also ticked up.
A senior IMF official noted that polls showed three-quarters of Greeks want to remain in the single currency and said the global lender wanted to help Athens make the necessary reforms.
"The IMF is very keen on continuing to support the adjustment and the reforms that are needed to ensure that Greece operates successfully in the euro area," Jord Decressin, deputy director of the IMF's European Department, said in Budapest.
(Additional reporting by George Georgiopoulos and Angeliki Koutantou in Athens, Francesco Guarascio in Brussels, Ingrid Melander in Paris, Gergely Szakacs and Krisztina Than in Budapest; Writing by Paul Taylor; editing by Anna Willard)