The eurozone’s sovereign debt crisis is again threatening to erupt, with growing disquiet that Greece’s rescue plan is in deep trouble, and the country could be forced to restructure its debts.

At the same time, the IMF’s latest Global Financial Stability Report highlights the huge financial challenges faced by the “peripheral” eurozone countries.

The report notes that investor appetite for bonds issued by debt-laden eurozone countries has dried up. The IMF report points out that the financial pressures are worse for countries which are forced to pay higher interest rates on any new borrowings compared to the average interest rates they’re paying on their existing borrowings.

The IMF calculates that between now and 2015, average funding costs could rise by as much as 249 basis points for Greece, 149 basis points for Portugal, 211 basis points for Ireland, and 117 basis points for Spain, even after taking account of the Greek and Irish bailouts.

The IMF’s stark analysis comes as Manuel Barroso, the European Commission president, has threatened Portuguese political leaders that disunity could derail negotiations over the country’s €80 billion ($115 billion) emergency rescue package from the European Union and the International Monetary Fund.

EU finance ministers have given Portugal’s politicians until mid-May to finalise the terms of detailed austerity package, in exchange for receiving the funds.

The minority Socialist government of José Sócrates resigned last month, after failing to get new austerity measures approved by parliament. New elections are scheduled for June 5. Portugal is hoping to receive some of its financial rescue before June when it faces a large debt repayment.

EU finance ministers want all of Portugal’s opposition parties to agree to the terms of the bailout, to avoid a situation like Ireland where the incoming government attempts to renegotiate the conditions of the emergency rescue.

But Portugal’s main opposition leader, Pedro Passos Coelho, who heads the Social Democratic Party, is insisting that he be given full access to the government’s accounts before his party participates in the negotiations. And other opposition politicians argue that the new measures imposed by the EU and the IMF should be aimed at boosting Portugal’s economic growth, and not merely on cutting government spending and raising taxes.

Meanwhile, fears are mounting that Greece will ultimately be forced to reschedule its debt.

It’s now almost a year since the EU and the IMF unveiled a €110 billion emergency rescue plan for Greece. But the country has failed to convince investors that its finances are on a stable footing, and Greece’s borrowing costs remain extremely high. Under the original rescue plan, Greece was expected to raise between €25-€30 billion from financial markets in 2012, but there are growing doubts as to whether this will be possible.

The German publication, Der Spiegel, reports that the possibility of a Greek debt restructuring was broached during a recent conference call between the German and French finance ministers, Wolfgang Schäuble and Christine Lagarde and the boss of the European Central Bank, Jean-Claude Trichet.

Trichet, however, staunchly opposed the idea, warning that it could trigger a crisis of confidence in the eurozone, and would also inflict hefty losses on banks that hold a lot of Greek loans. (The ECB itself bought up several billions of euros of Greek debt, in an attempt to stop the country’s borrowing costs from soaring out of control).

According to Der Spiegel, there is a growing conflict at the top levels of the European Union. “Schäuble and his colleagues are getting increasingly angry with Trichet. As they see it, if Trichet is going to be so dogmatic about rejecting a Greek debt restructuring, then he has to explain how Athens is supposed to be able to raise money on the markets by itself as early as the start of 2012, as envisioned in the plan for sorting out its finances.”

At this point, the only alternative to a debt restructuring would be to increase the size of Greece’s rescue package. But Germany and other major eurozone countries are extremely reluctant to provide any more taxpayer loans to the debt-strapped country.

According to Der Spiegel, “Schäuble and his foreign colleagues more or less agree on where things should go from here: Although Greece’s government cannot be forced to restructure its debt, no one can stop it from entering into voluntary talks on the issue with its creditors.”

Meanwhile, Greece’s finance minister, George Papaconstantinou has conceded that the country may not be able to return to financial markets next year as planned.

In an interview with the Financial Times, Papaconstantinou said the timetable would be clearer when once Portugal’s bailout had been finalised. “A judgment cannot be made before the summer and before Portugal closes its deal,” he said.

But Papacontstantinuou said the country needed more time to convince investors of its credit-worthiness, rather than a new rescue program. Greece, he said, was “ruling out [a debt] restructuring.”

*This article was originally published at Business Spectator