ATHENS, Greece — After surviving a crucial confidence vote, Greece's struggling prime minister prepared Wednesday for his next political battle — getting a new austerity package through parliament to avoid a default on the national debt.
Greece's international creditors demand that George Papandreou get approval for €28 billion ($40.24 billion) in budget cuts and new taxes and a €50 billion privatization drive by the end of the month before handing over €12 billion in bailout funds to save the country from bankruptcy in mid-July.
A default could drag down Greek and European banks and shake the finances of other weak eurozone countries such as Portugal, Ireland and Spain.
All 155 lawmakers from Papandreou's Socialist party voted to back their leader in the 300-seat parliament late Wednesday, eliminating the chance of early elections and shoring up confidence in markets.
After the vote, the euro remained buoyed, the Athens stock index rose 1.5 percent and the Greek bond yields dropped for a second day running, a sign investor confidence is improving slightly.
The vote offered some encouragement for the embattled prime minister, who has had to contend with strikes, riots and dissent within his own party because of the deeply unpopular measures.
But Papandreou's struggles are far from over. He still needs to convince several of his own deputies to support the austerity measures which they have publicly criticized. At least one deputy said he would not back them.
Alexandros Athanasiades told a private Greek television channel Wednesday that he would vote down the measures over objections to selling off state assets.
Papandreou is due to meet with lawmakers from his party later Wednesday to begin shoring up support for the measures slated for a Jun. 28 parliamentary vote.
Greece is being kept financially afloat by a €110 billion ($157 billion) package of bailout loans granted by other eurozone countries and the International Monetary Fund last year, and has implemented strict austerity measures in return, cutting public sector salaries and pensions, increasing taxes and overhauling its welfare system.
But the country has struggled to meet it targets, missing many, and is now in negotiations for a second bailout, which Papandreou has said will be roughly the same size as the first.
Meanwhile, officials from the IMF, European Commission and European Central Bank who have been overseeing Greece's reforms are in Athens to discuss the new austerity measures.Comment on this story
Nicola Mai with JP Morgan Chase bank said Papandreou will likely succeed in passing the austerity package, but sees greater risk to whether he can successfully implement it over time.
Mai said strong public opposition and weakness in the economy will make it difficult for Papandreou to push through necessary structural reforms, meet fiscal targets and sell state assets.
"We don't have much confidence that Greece will meet its targets, making a formal extension of debt maturities our central scenario for next year," said Mai.
"Still, it is possible that policymakers will once again choose the path of least resistance, and continue to fund Greece, even in the face of a disappointing adjustment."