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Greek government pushes painful 'reform' -- public anger rises over austerity

Thousands of Greeks protested against a tax and pension reform bill that is being debated in Parliament. Billions in public spending cuts have been demanded by eurozone countries and creditors as part of bailout deal.

Thousands of slogan-chanting pro-communist protesters filled the streets of Athens on Saturday to protest against the left-led government's

pension cuts and tax reform bill

now being debated by lawmakers. Many more demonstrators are expected to return to the streets on Sunday.

The proposed reforms would reduce Greece's highest pension payouts, merge several pension funds, increase contributions and raise taxes for those with medium and high incomes.

Prime Minister Alexis Tsipras assured lawmakers from his left-wing Syriza party - which holds a slim majority in parliament - that the cuts would spare the poorest.

But Sunday's rallies are expected to draw huge numbers, with large demonstrations planned in connection with celebrations for International Workers' Day, which were postponed from May 1 because of the timing of Orthodox Easter.

Greece's budget deficit has ballooned as it struggles to keep up with mammoth payments on its debt, which the International Monetary Fund believes is unsustainable.

The left-leaning Syriza government is under pressure from the 19-member eurozone countries to make significant cuts in public spending as a condition to unlock the next tranche of the 86-billion euro ($96 billion) bailout agreed to last summer.

Billions in cuts demanded by creditors

Watch video 01:48

Bailouts went to banks

The reforms pushed by Greece's government include cuts of at least 5.4 billion euros ($6.16 billion) from its budget. Some of Greece's creditors insist these cuts don't go far enough, with some asking for 3.6 billion euros in further cuts.

But European Commission chief Jean-Claude Juncker says that Athens has "basically achieved" most of its objectives required by its creditors and that talks over debt relief should proceed.

"Any package in excess of 5.4 billion is bound to be seen by both Greek citizens and economic agents, within and beyond Greece, as socially and economically counter-productive," Juncker wrote in a letter to the Eurogroup. "There is no way such a package could pass the present government, or, for that matter, any democratic government that I could envisage."

Greek Finance Minister Euclid Tsakalotos also called on eurozone countries Saturday to approve the economic reforms and warned of the price of a "failed state" if talks in Brussels next week don't produce an agreement.

"What Greece now needs is a clear statement, of measures... which will help investor confidence that Greece has turned the corner, and that country risk has (finally!) been removed from the agenda," Tsakalotos wrote in a letter to the euro area's finance chiefs.

General strike hits hard

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Greece paralyzed by general strike

Public anger in Greece is growing over the austerity measures imposed on the country. Labor strife has paralyzed much of the country since Friday, after trade unions called a

48-hour general strike to protest the government's proposed reforms.

Public transport has been badly hit, and ferries to outlying islands - a key lifeline - will be at a standstill until Tuesday.

Yet despite the pressure, Employment Minister Georgios Katrougalos stood by the pension overhaul, pointing to a funding shortfall of 2 billion euros. "This reform should have been done decades ago," he said.

Relations are poor between the governing leftist coalition, Syriza, and the Communist Party, especially since many Syriza leaders, including Prime Minister Alexis Tsipras, left the Communist Party in the early 1990s.

jar/bw (AP, AFP)

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