The Greek parliament is set to approve a tough 2012 budget late tonight which should seal the country's commitment to the hugely unpopular austerity measures demanded by its partners in return for fresh aid.
"The 2012 budget leads us to a primary deficit of 1.1% for the first time in many years," Finance Minister Evangelos Venizelos told the assembly during the five-day debate that preceded the vote. "This parliament has the chance to go down in the country's fiscal history as the first that reduced public debt," he said.
The vote is expected to be won easily but it could not come at a more sensitive time for the euro zone.
Credit rating agency Stand & Poor's warned overnight that it had put 15 members of the euro zone including Germany on negative credit watch, as Greece is after being already heavily downgraded.
Prime Minister Lucas Papademos, a former senior official with the European Central Bank considered to be a safe pair of hands, leads a coalition government with more than 250 out of the 300 seats in parliament so passage seems assured.
Assuming power last month after Socialist predecessor George Papandreou faced a parliamentary revolt over new austerity measures, Papademos was chosen to deliver the Greek side of the country's debt rescue bargain.
The key issue will be implementation after Greece missed deficit and debt targets laid down in a first EU and International Monetary Fund rescue in May 2010 and was then forced to seek more help as the economy slumped.
A second accord agreed in late October requires Greece to adopt even tougher austerity measures in return for new funding of €100 billion and a controversial debt write-down deal with creditor banks worth €100 billion.
The accord also makes available €30 billion to help local banks cover the losses on their holdings of Greek government bonds caused by the 50% bond write-down.
The budget forecasts that Greece's public deficit will drop to 5.4% of gross domestic product (GDP) in 2012 from 9% this year, compared with the EU ceiling of 3% and the previous forecast for next year of 6.8%. It is based on the economy's shrinking 2.8%, worse than the previous 2012 estimate of 2.5% but still much better than the expected 5.5% contraction for 2011, the third year of recession.
The government has said that once the package is passed and put into effect, no new austerity measures will be needed next year.
For the moment, if the budget passes, Greece looks on safer ground - the EU has approved its share of an instalment of aid worth €8 billion under the 2010 bail-out and the IMF yesteray released its contribution of €2.2 billion.
That money should be enough to cover debt and bills due by December 15, saving Greece from default, and allowing European leaders some more time to try and put together the overall package needed to stabilise the whole euro zone.
