Either the International Monetary Fund or the European Union will provide financial assistance to Greece to help that country avoid default, says New York University economist Nouriel Roubini.
Greek Prime Minister George Papandreou has pledged measures such as state wage freezes to narrow the European Union's biggest budget deficit, which ran at 12.7 percent last year, well above the EU's 3 percent limit.
Investors in Greece's 10-year bonds remained skeptical of the plans at first, demanding to hold Greek 10-year bonds instead of benchmark German Bunds to almost 400 basis points last week, the highest since the year before the euro’s debut in 1999, Bloomberg reports.
But there's hope for Greece.
“I expect there is going to be eventually some financial support,” Roubini tells Bloomberg.
Money will come “either directly from the European Union or the ECB or, as I suggest, Greece should be going to IMF to get an IMF package.”
The European Union has approved of Greece's plans to right its economy but has stressed the country is under strict supervision when it comes to managing its economy.
“Every time we observe slippages we will ask the Greek authorities to adopt additional measures,” says Joaquín Almunia, the European commissioner for economic and monetary affairs, according to the New York Times.
Greek government officials have said they want the deficit at 3 percent by 2012.
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