The prospect of a fresh vote looms after Syriza party hardliners vowed - once again - to reject new austerity measures. Finance Minister Euclid Tsakalotos hopes the latest bailout talks will conclude this week.
As a rebellion by an ultra-left-wing militant faction deepened, Greece's government admitted on Tuesday that early elections were "likely."
Hardliners within the ruling Syriza party have ordered MPs to vote against new austerity measures in a second vote, expected in around two weeks, following a similar revolt last month by nearly a quarter of its own politicians.
"I personally will not vote for a new bailout that will continue to destroy the country and hurt its people," Panagiotis Lafazanis, a prominent Syriza MP, told Real FM radio. He vowed to fight to the end to stop Greek leaders signing a third bailout.
Government spokeswoman Olga Gerovasili admitted on Tuesday that the party was relying on opposition support to get parliamentary approval for the latest reforms demanded by international lenders, adding that another revolt would likely lead to fresh elections.
The Syriza party is due to hold an emergency congress next month in an attempt to heal the divide.
Bailout talks positive
Gerovasili's comments came as Finance Minister Euclid Tsakalotos told reporters he expected the latest bailout discussions with lenders to be concluded this week. He saidthe talks, which began last week in Athens, were going better than expected.
Officials have set an August 20 deadline for an agreement on an additional 86 billion euro loan. Two days later, Greece faces a new 3 billion euro payment to the European Central Bank (ECB). Part of the new bailout cash has been earmarked to make the payment. Without it, Greece will - once again - be in default.
Analyst Michael Hewson of CMC Markets UK predicted that the new rescue package will have to be "well above the 86 billion euro numbers being bandied about, which in turn is likely to make any discussions about debt relief even more contentious."
The two sides are expected to begin drafting the bailout accord from Wednesday, after discussing the privatization of national assets on Tuesday. Tsakalotos said there were no significant disagreements with lenders on privatization.
The uncertainty led Greece's main stock index to slip further on Tuesday, following a 16 percent rout a day earlier. The Athens stock market had reopened on Monday following a five-week shutdown. Amid the shaky political outlook, Greek banks closed as much a third lower on Tuesday.
The economy is headed back into deep recession following months of deadlocked negotiations with lenders, which saw billions withdrawn from Greek banks. It is predicted to shrink by up to 4 percent this year.
mm/jil (AP,dpa, Reuters)