Reuters/New York Times
April 18, 2011
Greek officials denied again on Monday that some form of debt rescheduling was imminent as sources within the German government said Athens was likely to do so before the end of the summer.
Financial markets are increasingly convinced Greece will have to renegotiate the terms of its public debt, recognizing that its economy cannot grow fast enough to service a burden that is set to swell to 160 percent of national output.
German government sources said on Monday that Athens, which is struggling to impose national belt-tightening aimed at regaining creditors' faith, would not avoid opting for a restructuring before the end of the summer.
But officials have repeatedly insisted that such a move would prove costlier in the long run and Bank of Greece Governor George Provopoulos told shareholders on Thursday it would hurt banks and pension funds, and shut access to capital markets.
"The Bank of Greece has explained with clarity since last October that such a (restructuring) option is not necessary, nor desirable," he said. "It would have catastrophic consequences."
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