ATHENS // Greek leaders said they were almost certain a coalition government would be formed today, as pressure mounted from the international community and financial markets to break the political deadlock.
The centre-right New Democracy party, led by Antonis Samaras, has been locked in talks with other pro-bailout parties since coming first in Sunday's election.
The socialist Pasok party has already said it will support the new government, though it has not yet decided what form this support will take.
"A government must be formed as soon as possible," the Pasok leader Evangelos Venizelos said last night, adding that a deal could be announced as early as midday today.
Mr Samaras also held talks with Fotis Kouvelis, the leader of the Democratic Left. If all three join the coalition, that will give the government a commanding majority of 180 seats in the 300-seat parliament.
Both New Democracy and Pasok support the austerity measures imposed as part of Greece's 173 billion euros (Dh804 billion) bailout from international lenders, but also hope they can tweak some of the terms to give some respite to a population weary from two years of austerity.
Unemployment was more than 22 per cent in the first three months of the year, shops and businesses are closing down on a daily basis, and Greeks are increasingly forced to visit soup kitchens and charity health clinics in search of free food and essential medicines.
Although EU leaders - particularly the German Chancellor Angela Merkel - have opposed any change to the conditions of the bailout, there is some room for manoeuvre since the months of political deadlock in Greece mean it has fallen behind in targets for the bailout programme.
Mr Venizelos called earlier this week for a cross-party team to renegotiate the terms.
There are reports that his party and New Democracy are planning to ask eurozone countries for a two-year extension on meeting their fiscal targets, which they estimate would cost lenders an extra 16 billion euros. News of the impending coalition deal and a possible renegotiation of the bailout caused the euro to rebound against the dollar yesterday, although worries about Spain's banking system are likely to limit the rally.
On the streets of Greece, there is a grudging acceptance that the country will return to the harsh austerity programme of the past two years as normal life resumed yesterday.
Many are unhappy to see the return of the two parties - New Democracy and Pasok - which have dominated Greek politics for the past three decades and are largely blamed for failing to reform the corrupt and inefficient system.
Georgia Arseni, a 35-year-old shopkeeper in central Athens, said: "These are the people that spent years encouraging us to spend money that did not belong to us, and which we could not afford, and told us everything would be fine."
Ms Arseni epitomises the problems faced by many Greeks: she is thousands of euros in debt from unpaid rent, electricity bills and social security payments, while her business is drying up and many of her neighbours are shutting down.
She also has first-hand experience of how official corruption has seeped into the roots of daily life in Greece.
"I used to provide items to the Ministry of Finance - things like toilet paper and deodorant," she said. "They would always make me add 40 per cent to the bill, so that they could fiddle their books.
"It was very annoying because it would push me into a higher tax bracket.
"And then they would not even pay their bills for six or eight months at a time, so in the end I had to stop serving them."