February 21, 2012
Greece may have dodged a default with its last-minute bailout deal, but longer-term doubts over its ability to repay its staggering debts remain, raising questions about whether even more rescue money will eventually be needed.
European leaders were to sign off on Greece’s second bailout of about 130 billion euros ($172 billion) at their summit meeting in Brussels next week — subject to Greece’s taking immediate steps to put into effect the deep structural changes that they agreed to.
Greece must also persuade, if not actually force, its private sector bondholders to accept a higher-than-expected loss of more than 70 percent on their holdings to reduce Greece’s debt stock by the targeted amount of 100 billion euros.
It is uncertain, however, if another round of austerity can bring Greece to a point whereby it generates enough revenue to pay off its obligations — even if the private sector debt deal goes through — and return to the market on its own.
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