Greek economic prospects darkened as European bickering risked delaying the next rescue payment and defections weakened Prime Minister George Papandreou’s majority.
An emergency session of euro finance chiefs in Brussels yesterday failed to break a deadlock on how to enroll investors in a second bailout without triggering a default, casting doubt on funds due from the International Monetary Fund next month.
In Athens, protesters gathered outside Parliament as lawmakers began to debate budget cuts and asset sales that are conditions of the aid. Ports, banks, hospitals and state-run companies were paralyzed by strikes today while a Papandreou ally said he won’t support the austerity measures and another bolted his Socialist Party.
Debt restructuring “seems to be increasingly probable,” Raghuram Rajan, a professor at the University of Chicago and a former chief economist at the IMF, said today in Singapore. “The political will required to do what would be necessary to service the level of debt that is building up is reaching the limits of what Greece can do. In other words, I won’t say it’s inevitable, but it looks increasingly likely.”
Bloomberg
