Greek Leader Irked by Speculation on Debt

New York Times
May 7, 2011

Prime Minister George Papandreou of Greece on Saturday attacked “rumor mongering” and speculation after a German magazine reported that Athens was threatening to leave the euro zone in order to bargain for easier terms on its huge debt obligations.

But even as Greece and the European Union denied the reports and sought to calm nervous markets, other European officials acknowledged that the country needed its loans adjusted after new figures showed a deep recession and higher-than-forecast fiscal debt.

Instead of a projected budget deficit of 9.4 percent of gross domestic product in 2010, the Greek deficit was 10.5 percent, despite some harsh austerity measures, in part because the economy shrank faster than expected.

The new wave of concern about Greece will reverberate, and will probably complicate coalition negotiations for a new government in Finland, and affect the Portuguese election next month.

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