Greece unveiled a tough new austerity budget on Wednesday, sparking a call for 48-hour general strike, as the EU said there was still work to be done before the recession-hit country can access loan funds needed to stave off bankruptcy.
Finance Minister Yannis Stournaras unveiled the 2013 budget to lawmakers, which also predicts that the economy would shrink by a worse than previously expected 4.5 percent next year and the country's debt mountain will swell to 346 billion euros ($450 billion) or 189 percent of economic output.
Adding to the government's woes, the main Greek union called for a 48-hour general strike starting on November 6 -- just 10 days before the country risks sliding into bankruptcy if it fails to secure 31.2 billion euro lifeline from the "troika" of international creditors.
Conservative Prime Minister Antonis Samaras had announced on Tuesday that his government had agreed with the mission of 'troika' auditors in Greece on the terms of a new 13.5 billion euro austerity package needed to unlock the next instalment of rescue loans.
Accordingly, the finance ministry on Wednesday introduced a budget and a three-year economic programme pledging the required level of cuts in 2013-14.
But ahead of a conference call among eurozone finance ministers, who are due to make a final decision on the payout by November 12, the European Commission on Wednesday noted that a deal with Greece was technically still pending.
"We are continuously narrowing the number of open issues," Simon O'Connor, spokesman for the EU's euro commissioner Olli Rehn.
O'Connor said Brussels was "confident" of striking an accord "soon."
The Eurogroup of finance ministers also demanded on Wednesday that Greece "swiftly" solve outstanding issues to clear the way for the loan payment.
People walk past the Greek parliament in Athens on October 30, 2012. Greece unveiled a tough new austerity budget on Wednesday, sparking a call for 48-hour general strike, as the EU said there was still work to be done before the recession-hit country can access loan funds needed to stave off bankruptcy.
"We called on the Greek authorities to solve remaining issues so as to swiftly finalise the negotiations," said Luxembourg Prime Minister Jean-Claude Juncker in a statement after a two-hour conference call.
Juncker did not elaborate on the issues that remain, but the Greek government plans to introduce further reform bills in parliament next week.
The German government had earlier noted that work remains to be done on a Greek deal but acknowledged that the government seemed serious on reform.
"We acknowledge that the Greek government of Mr (Antonis) Samaras is going about, has gone about, this very difficult task of advancing the reforms in the country in a serious way," Steffen Seibert told a regular government news conference.
Samaras's announcement on the bailout talks angered his socialist and moderate leftist allies in the coalition, who insist the deal on a new round of painful spending cuts and other reforms is not done until it is approved by parliament.
The 2013 budget gives a grim picture of the outlook for the country.
It predicted that gross domestic product in Greece -- already in its fifth year of recession -- would shrink by 4.5 percent compared with a forecast of 3.8 percent a month ago, although below the 6.6 percent decline expected for this year.
The 2013 public deficit forecast was increased to 5.2 percent the previous forecast of 4.2 percent.
The government is planning 9.4 billion euros ($12.2 billion) in cuts which will affect mainly stage wages, pensions and benefits that have already been drastically reduced over the past two years.
People walk by slogans on the Athens Academy in the city centre on October 30, 2012.
But it will still need to borrow over 68 billion euros next year, the draft budget said.
Greece desperately needs to reach a deal before November 16 as a three-month treasury bill worth five billion euros must be repaid that week.
The government hopes to secure the eurozone's approval of the cuts by November 12 to unlock a 31.2-billion-euro instalment of EU-IMF rescue loans.
"If the deal does not pass... the country will be led to chaos," Samaras warned on Tuesday.
But the unions threatened more social unrest, announcing a general strike for November 6 and 7 to coincide with debates next week on the budget and other reform measures.
"The central aim and demand of the unions is the rejection (by parliament) of unacceptable, destructive and coercive measures imposed by the troika," the GSEE union said in a statement.
The draft budget was submitted to parliament just before MPs passed a law that facilitates the sale of state companies, with the government planning to raise 2.5 billion euros in asset sales in 2013.
Under the law, the Greek state is no longer obliged to maintain a specific minimum stake in several public utilities that will be divested in coming months.
These include main electricity provider PPC, leading refiner HELPE, gaming monopoly OPAP, the water companies and port authorities of Athens and Thessaloniki, Hellenic Post and racetrack operator ODIE.
Greece was originally supposed to raise 50 billion euros from asset sales by 2015.
This was later scaled down to 19 billion, and on Wednesday the government said it planned to raise just 9.5 billion euros by 2016.
Wednesday's privatisation vote was seen as a curtain-raiser for a bigger showdown next week on the budget and remaining reforms.
Greek media meanwhile were on strike on Wednesday over social security measures affecting journalists.