03:22 - Source: CNN
Protesters back on the streets of Greece

Story highlights

Greek officials are under pressure to reach a deal for a new bailout

Greece needs the money to ensure it avoids default on a payment due in March

Unions say they are unhappy with the new cuts being demanded by Greece's lenders

The prime minister needs to secure the backing of the main political parties for the deal

CNN —  

Greek union members are expected to go on a daylong strike Tuesday to protest new austerity measures sought by foreign lenders as the country negotiates to keep its finances afloat.

Officials in Greece are under pressure to reach an agreement on a new bailout package with the threat of a default hanging over the country.

Prime Minister Lucas Papademos met with officials from the European Union, International Monetary Fund and European Central Bank on Monday to try and hammer out the details of a €130 billion bailout deal.

Greece needs the money to avoid defaulting on a €14.5 billion bond redemption in March. The concern is that a so-called disorderly default could force Greece out of the euro monetary union and shock the global financial system.

Papademos must also convince the leaders of Greece’s three main political parties to back a package of fiscal and economic reforms that are a condition of the bailout.

The party leaders agreed over the weekend on the “main elements” of the program, including a plan to reduce public spending by 1.5% of gross domestic output this year, according to Papademos.

But talks scheduled for Monday were pushed back to Tuesday amid apparent disagreements over additional job and salary cuts, as well as pension reforms and tougher tax enforcement.

The country’s unions say they are unhappy with the new demands. They have called many strikes in the past few years to protest the successive waves of austerity measures announced by the authorities.

Greece, which owes some €330 billion, has come close to default before.

The nation has struggled to follow through on budget cuts and economic reforms that were a condition of its 2010 bailout package. But the nation’s economy has been in recession for years and many analysts warn that additional austerity could make the situation worse.

EU leaders have been sounding increasingly frustrated with the lack of progress in Greece.

President Nicolas Sarkozy of France said Monday that failure was not an option for Greece, adding that “considerable measures” had been put in motion to help the nation “out of the situation it finds itself in today.”

“But the Greek leaders have made commitments and they must respect these scrupulously,” he said. “There is no choice, there is no choice.”

EU finance ministers are widely expected to hold an “extraordinary” meeting sometime this week, although no official date has been set.

Meanwhile, Greece appears close to a deal with its creditors in the private sector to write down a portion of the nation’s debt.

The agreement, which would result in significant losses for bondholders, is intended to help reduce Greece’s debts to 120% of GDP by 2020, from about 160% currently.

The worsening Greek economy has raised calls for the nation’s creditors in the “official sector” to provide some relief.

The European Central Bank, which holds an estimated €30 billion to €45 billion of Greek debt, is under pressure to forego profits on those bonds, as are individual euro area central banks.