Greece now needs $145bn bailout to avoid collapse - Telegraph.co.uk

The new package of financial aid comes on condition of painful spending cuts, the prospect of which are sparking fury among the Greek people, who are mired in a deep recession. The measures include a 22pc drop in the minimum wage, civil servant redundancies and cuts to pensions.

Thousands of protestors massed in Athens yesterday after the Greek cabinet approved the plans late on Friday night, while a general strike brought public transport to a halt in the capital.

The interim coalition government led by Lucas Papademos has a large majority, which should mean tonight's parliamentary vote backs the deeply unpopular measures. But defections look likely.

Six members of the coalition government have already resigned in protest over the budget plans – four from the far right, and two socialists.

Leaders from across the political spectrum urged their followers to stomach their anger and back the plans, designed to save around 7pc of Greece's gross domestic product over three years.

"We have to sacrifice a lot so as not to sacrifice everything," said George Papandreou, the former prime minister and current leader of the socialist Pasok party. "We must speak honestly and tell Greeks what bankruptcy really means. It means chaos."

Antonis Samaras, the leader of Greece's conservative New Democracy party, said the bailout "distances us from bankruptcy, looting, the chaos that would follow" in the absence of a rescue package.

Nonetheless Greek officials are braced for increased protests today, which could turn violent, to coincide with the parliamentary vote. In addition, further legislation detailing the measures will have to be voted on within days, though the exact timing has yet to be set.

The atmosphere in Greece is becoming increasingly charged, as the public chafes under the prospect of more austerity measures. Some fear that they are deepening the country's economic downturn to a dangerous degree.

On Friday, the powerful police union Poasy threatened to arrest members of Greece's troika of lenders. Poasy said it was offering a bounty of one euro apiece for each of the mission chiefs from the three organisations, whom it called the "undertakers of our people's dreams".

Separately, the head of Greece's Catholic church yesterday made a public appeal to the Pope to aid Greeks in their "tragic situation", citing hospitals which were lacking heat and medicines.

Economists at Citigroup predict that Greece will avoid a disorderly default on its debts in March, but have raised the chance of Greece exiting the euro over the next year and a half to one in two, roughly double the risk they saw previously. The sticking point will be Greece's failure to stick to the terms of its rescue packages, which will ultimately exhaust the patience of its supporters, they believe.

"We consider the willingness of euro area creditors including the European Central Bank to continue providing further financial support to Greece, despite Greek non-compliance with programme conditionality, to have fallen substantially," the economists wrote.