ATHENS, Sept 7: The chief auditors of Greece's bailout lenders arrived on Friday on a crucial mission to decide whether Athens gets extra time to implement spending cuts in return for badly needed loans.

The troika of creditors -- the IMF, EU and European Central Bank -- have demanded Athens make up for lost time after delays brought on by back-to-back elections that caused a two-month political deadlock.

But Greece has been pleading for “breathing space” to carry out billions of euros in spending cuts required in exchange for rescue loans.

Demonstrators were expected to heap further pressure on the government on Saturday, with the two main unions calling a protest in Greece's second biggest city Thessaloniki against further cuts as the country roils in its fifth year of recession.

The Greek economy contracted 6.3 per cent in the second quarter on a 12-month basis, after already shrinking 6.5 per cent in the first quarter, official data posted Friday showed.

Gross capital investment plunged 19.4 per cent during the three months to June and consumer spending slipped 7.2 per cent compared to a year ago, with household expenditure down eight per cent and public spending falling 3.7 per cent.

Amid the cascade of bleak data, the coalition government has not finalised a new austerity programme to implement the cuts necessary to receive the next instalment of its EU-IMF rescue loans.

Auditors, whose crucial report is expected in October, are due to meet Finance Minister Yannis Stournaras on Sunday afternoon, while no date has been given on their meeting with Prime Minister Antonis Samaras.

Visiting EU President Herman Van Rompuy warned that Greece must produce fiscal and reform results to obtain further support.

If Greece stays fully committed to these objectives and delivers results, “European institutions and even every state will remain committed” to helping Greece, said Van Rompuy.

He added: “Prime Minister Samaras has confirmed to me that his government, that his coalition behind it, are firmly committed to press ahead to this consolidation and important reform.”

Van Rompuy also commended the Greek people for their “courageous choices in favour of the euro and their place in the euro”.

A favourable assessment from the auditors is necessary for the release of a 31.5 billion euro ($39.9 billion) loan installment, which Greece desperately needs as part of a promised 130-billion-euro bailout from the European Union and International Monetary Fund.

French President Francois Hollande and German Chancellor Angela Merkel have both said that the results of the troika assessment would determine their decision on whether to grant Greece extra time.

If approved, most of the next tranche of rescue loans will be spent on recapitalising Greek banks which took a heavy blow in a Greek sovereign debt rollover earlier this year.

Auditors will also look at the new round of cuts amounting to around 11.6 billion euros.—AFP