Despite a second bailout deal, the Greek debt crisis is far from over.

"Turbulence could easily resurface," Christine Lagarde, the International Monetary Fund managing director, said Tuesday in her first major policy speech, touching on issues of sovereign debt around the world.

Greece struck a deal last week to improve the sustainability of the country's debt and avoid contagion risk. The markets initially reacted favorably to the package but Monday began to show traders' doubt.

Seventeen EU countries have been working on the Greek bailout plan.

"The clock is ticking," Lagarde warned. "It is essential that the summit's commitments should be implemented quickly."

The IMF may need to engage in serious discussion on its resources as more countries face crises, Lagarde said.

On top of the $159.5 billion granted to Greece in May 2010, EU leaders agreed to provide another $158.1 billion of 15- to 30-year loans at a lowered interest rate of 3.5 percent, with an additional grace period of 10 years.

Private-sector creditors will swap or roll over $196 billion of existing bonds into new, long-term instruments -- a move considered as a "restricted default" by Fitch Ratings. By doing so, investors are going to suffer a 21 percent loss of the net of the net present value of their Greek debt holdings.

Evangelos Venizelos, the Greek finance minister and deputy prime minister, met with U.S. Treasury and the IMF officials Monday to gain American support.

Speaking Monday evening at the Peter G. Peterson Institute for International Economics in Washington, Venizelos said Greece needs "a more functional and less expensive state."

Greece will push forward with a privatization program by selling real estate and government stakes in companies to achieve the government's goal to "return to positive growth and create primary surpluses by 2012," Venizelos said.

The Greek economy shrank 4.5 percent last year and the IMF predicts it will shrink 3.9 percent this year.

On Monday, rating agency Moody's Investors Service downgraded Greece's local- and foreign-currency bond ratings to Ca from Caa1, just one notch from Moody's lowest rating. The "junk" bond rating reflects the current uncertainty about the exact market value of the securities creditors will receive in the exchange.

Despite the unfavorable ratings, Venizelos said he expected private-sector participation to reach at least 90 percent.

"We are here to achieve a difficult but not impossible mission," he said. "I am here to win this war."

Clearly, Venizelos hopes to interest U.S. investors in Greece, despite the country's latest setbacks.

"This is also my invitation to the U.S. private-sector," he said Monday, adding Greece will once again be an "investor friendly country."

It's still an open question whether the new deal cut Greece's debt enough to allow it to reach sustainable levels.

IMF officials estimate that Greece's debt-to-gross domestic product ratio would reach 139.3 by the end of 2011.

"With the current plan, if everything goes smoothly, by 2014, Greece will still have about 120 percent of GDP of debt, said Sandro Andrade, a professor of the University of Miami School of Business Administration. "That's quite a lot."

However, Greece can't choose to simply default.

"If Greece decided to pay 25 cents on a dollar, take it or leave it, which was what Argentina did, the country's banking system will take a huge blow," Andrade said. "Around 10 percent of the total assets of Greek banks are parked in Greek government bonds."

Investors remain doubtful about the deal's effectiveness and the fate of the euro.

As a member of the European Union, Greece can't shore up its troubled economy by utilizing exchange rate devaluation -- a key macroeconomic tool favored by policy makers.

Exports become cheaper and hence more competitive in the eyes of the rest of the world, which help the economy grow.

Greece also cannot simply devaluate its currency because its currency is the euro, which is the combined currency of 17 countries.

Amitrajeet Batabyal, the Arthur J. Gosnell Professor of Economics at Rochester Institute of Technology, said the second bailout is "a short-term solution."

"What they've done is delay the inevitable." Batabyal said. "Within the next decade, either a country like Greece will voluntarily leave the euro zone and go back to the drachma or the European Union will ask them to leave."

"Even if one country bails, I think it's the end of the euro," he said. "The euro is a grand experiment that's trying to compete effectively with the U.S. A lot of people have warned that this is an experiment that's likely to fail."

Batabyal said the impact of the new bailout plan on the U.S. markets and U.S. financial entities will largely be neutral or slightly positive.

The yield on the Greek 10-year bond fell 6 basis points, to 14.7 percent Tuesday.

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