The Greek government voted to back further austerity measures on Thursday as protests raged in the streets of Athens.

During a six hour cabinet meeting, the government decided on a wave of cuts and privatizations, which must now go to parliament for approval.

According to a senior Cabinet official, Greek prime minister George Papandreou told the Cabinet "we have sought and we have found the fairest possible solution."

The Greek government is facing mounting pressure from the European Union, the European Central Bank and the International Monetary Fund to slash the country's deficit. The institutions which are providing the funding for a 110 billion-euro ($161 billion) international bailout have warned that the next installment cannot be paid until Greece closes financing gaps.

New wave of strikes

In anticipation of further austerity measures, new strikes hit Greece on Thursday, as hopes for growth in its troubled economy were further diminished by increasing pressure from creditors.

Workers at state companies likely to be privatized staged a walk-out supported by civil servants. Employees from the postal service, state railways and banks walked off the job to protests a new wave of austerity measures. In the capital Athens, about 2,000 people took to the streets.

The government's mid-term fiscal plan - which would see 6.4 billion euros in extra cuts this year alone - has come under fierce criticism from within the ruling Socialist party. Parliament is to vote on the plan before the end of June, and its rejection could prompt early elections.

Greece is on the brink of insolvency, with a debt of more than 340 billion euros ($497 billion) and unemployment at a record 16.2 percent.

Author: Charlotte Chelsom-Pill, Sarah Harman (AFP, dpa, AP)
Editor: Michael Lawton