Political risks to observe in Greece

ATHENS: A year after it turned to the EU and the IMF for a bailout, Greece is struggling to meet targets and convince its lenders it deserves extra funding to buy it more time to resolve its debt crisis.

Bleak macroeconomics data and increasing fears that Greece will have to extend debt maturities or impose losses on investors highlight persistent risk to the current three-year reform plan, Athens has designed new austerity measures and privatisations to show its determination to repair its finances but international lenders want the political opposition also to consent to the belt-tightening.

Thousands of Greeks rally every evening outside parliament chanting "Thieves, Thieves!"

Opinion polls show the government's support ratings slipping with one survey indicating it has lost its lead over the conservatives.

The Socialist government is facing discontent among ruling party members over austerity policies which were meant to pull Greece out of its debt crisis but have led to a deep recession and driven unemployment to record levels.

So far it has failed to get backing from opposition parties for its austerity policies, a main demand for getting extra EU aid given that its mid-term fiscal plan extends beyond the current government's term.

Greece announced new austerity measures and kickstarted a stalled privatisation agenda in May, seeking more aid from its lenders to cover a funding gap next year as its projected return to bond markets in 2012 is highly unlikely.

EU and IMF inspectors have concluded a performance review and opened the way for Greece to get its fifth slice of 12 billion euros of the current bailout, without which the country would be unable to cover pressing funding needs after July 15.

Copyright Reuters, 2011