The Greek prime minister will face a hostile audience on Saturday when he makes a key economic policy speech in the northern city of Thessaloniki after several days of turmoil on financial markets, and a controversial decision to sack thousands of public sector workers.
As recession bites deep in his crisis-hit country, George Papandreou is under mounting pressure. His Panhellenic Socialist Movement’s rating is slipping in opinion polls, some German politicians have called for Greece to exit the eurozone, and his finance minister was on Friday forced to dismiss market speculation that the country might default over the weekend.
Evangelos Venizelos called the rumours “a game in bad taste; an organised piece of speculation against the euro and the eurozone countries”. He insisted Greece would fully implement its economic reform programme agreed with the European Union and International Monetary Fund, “without taking into consideration any element of political cost”.
Markets gave the country a rough ride again on Friday, with yields on Greek bonds soaring to new highs ahead of a deadline for investors to indicate their willingness to participate in a debt swap and rollover included in the country’s second international bail-out.
Greek bankers said they were confident that participation would reach 80 per cent, allowing the deal to go ahead, although the government had previously said its approval was conditional on a 90 per cent take-up by bondholders.