Greece rejects debt restructuring

Greek
Prime Minister George Papandreou has said restructuring the nation’s debt would
be “catastrophic” for the country’s credibility and its economy.

If debt
repayments were suspended, he said Greece “would head towards a potential
and probable collapse of the banking system”.

That, he
said, could lead to the loss of Greek families’ property, which would be
“a tragedy”.

His
comments come after the IMF agreed to give Greece a new loan.

Budget
deficit

Greece
is imposing tough economic measures including pay cuts and tax rises in return
for a massive EU-IMF bailout to stave off bankruptcy, after debts close to
300bn euros were revealed.

It is
hoped that strict financial controls will reduce the budget deficit from 13.6%
of annual output in 2009 to 8.1 per cent this year.

On
Friday the IMF said it would provide Greece with 2.5bn euros ($3.2bn; £2.1bn),
its share of a fresh 9bn euros loan instalment, with the rest to come from the
EU.

Greece
has already received 20bn euros of a 110bn euros international rescue loan,
agreed earlier this year as its economy went into meltdown.

Protests

Data
this week showed Greece’s economy shrank 1.8% in the second quarter.

EU and
IMF inspectors are due in Athens next week to review the progress of Greek
austerity measures.

However
those measures implemented to tackle the massive debt burden have led to
widespread protests and strikes.

On
Saturday Greek unions staged mass protests in the city of Thessaloniki.

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