Greece's governors and other local officials have agreed to lend cash to the near-bankrupt central government after prime minister Alexis Tsipras assured them the measure was short-term.

Greek lawmakers approved a decree late on Friday to force state entities to lend cash to the central government, in spite of protests by municipalities and labour unions.

The measure, which was approved by 156 lawmakers in the 300-seat chamber, caused an outcry by local governors, who met Mr Tsipras on Saturday to seek an explanation about the necessity of the action.

"We got assurances that the measure is an emergency and temporary one, so it will become optional in a short time," Kostas Agorastos, the head of the Greek group representing local government officials, told reporters after the meeting.

“Since [Tsipras] talked to us honestly, and since our country needs this negotiating tool now for the negotiations to be completed, we will give it this tool,” he said.

Just weeks away from running out of cash, Athens has been tapping the cash reserves of public sector entities through so-called repo transactions.

Forced lending

On Monday it ordered entities, including local governments, to lend spare cash to the state while it tries to reach a deal with sceptical foreign creditors on new financial aid.

"The state is committed to paying salaries and pensions," the government's parliamentary speaker, Nikos Filis, told lawmakers in defending the legislation. "The money will be earning better interest rates" than what banks pay."

In a symbolic protest, municipal workers walked off the job for three hours on Friday. Some local government officials have threatened to defy the orders, while others have said they need more information before contributing to central government coffers. – (Reuters)