Greece's prime minister is set to meet later today with lawmakers on an unpopular package of austerity measures needed to stave off a national debt default.
The meeting comes after George Papandreou survived a crucial vote of confidence by parliament on his new cabinet, with 155 votes in favor, 143 against, with two abstentions.
The vote ensures the survival of the Papandreou's new government and sets the stage for a vote next week on austerity measures that international creditors demand as a precondition to the next disbursement of a bailout loan package.
Papandreou already is urging lawmakers to pass the austerity measures.
"From this crisis, this is our one chance, our only chance, where if we hesitate, if we kneel, if we become scared, if we throw away this chance in the midst of a difficult road, history will judge us harshly," he said.
Greece has said it will face a default unless it receives a $17.3 billion rescue loan installment from European countries and the International Monetary Fund (IMF).
It needs the funds from the EU and IMF's $158 billion aid package by next month to fulfill its massive debt obligations.
Last week, Papandreou reshuffled his cabinet and replaced his finance minister to ease growing dissent within the governing party.
New Finance Minister Evangelos Venizelos promised on June 21 that parliament would vote next week on some $40 billion worth of budget cuts and other savings.
Before the confidence vote, world markets rose on expectations that Papandreou would win. His Socialist party holds a five-seat majority in the 300-member legislature and a simple majority was all that was needed.
In a statement, European Commission President Jose Manuel Barroso welcomed the results of the vote, calling it "good news for Greece and for the European Union as a whole."
Barroso, however, warned that parliament still needs to approve the budget cuts and fiscal reforms that are required by the EU and IMF. Barroso said these measures, once approved, will "mark a big step in Greece's journey back towards sustainable public finances and a return to growth."
On June 22, before the vote, Barroso called for major reforms to the structure of the Greek economy.
"The only way forward is an effort on the part of Greece to reduce its structural deficit," Barroso said. "And that can only be done through privatization now and through an ambitious and no doubt painful plan, but one that is nevertheless necessary to carry budget consolidation through."
Widespread Street Protests
The proposed austerity measures have prompted widespread street protests in Greece that turned violent during the past week. Ahead of the confidence vote, protesters gathered again in front of the parliament in Athens to show their opposition to the proposed austerity package.
Speaking during parliamentary debate on the confidence motion, opposition leader Antonis Samaras said the planned cuts "simply will not work." Samaras has proposed lowering the debt by revitalizing the economy and cutting taxes.
"We all have to realize that the program did not work and will not work because it is the wrong recipe," Samaras said. "Not because it was not implemented properly -- of course there were mistakes and shortcomings in its implementation -- it's the wrong recipe, not that it was implemented wrongly."
Following talks this morning with German Chancellor Angela Merkel, acting IMF chief John Lipsky said Greece's main problem is not its debt levels but a lack of competitiveness, its economic "isolation" within the eurozone, and a "broken" fiscal system.
Lipsky called Greece's financial predicament "exceedingly difficult" and added, "The underlying fiscal system is broken. But that means it can be fixed...It is a matter of political will."
compiled from agency reports