Senior officials from Greece's government launched a frantic 24-hour effort late Tuesday to push more austerity measures through parliament and meet demands from European creditors as it faced down mounting anger at home.
The belt-tightening measures, which include pension cuts and higher sales tax rates on everything from condoms to race horses, were agreed upon with eurozone leaders to prevent the Greek economy from collapsing, and as part of planned third bailout worth 85 billion euros ($93 billion).
The new measures mean recession-hit Greeks will have to pay more for most goods and services by the end of the week.
But potentially adding to the difficulty the leftist Government faces in selling the proposals to members of the Greek parliament, a report Tuesday suggested that emergency cash being offered in the deal would be insufficient in alleviating the country's economic woes.
The document (PDF) from the International Monetary Fund (IMF), one of Greece’s primary creditors who has been heavily involved in the past Greek bailouts, said Athens would need far bigger debt relief than eurozone partners have been prepared to offer.
“The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date —and what has been proposed by the ESM,” the IMF said, referring to the European Stability Mechanism bailout fund which Greece is applying to for funds.
Earlier this month, the IMF said Greece needed about 60 billion euros through 2018. But that ballooned to 85 billion euros during the past two weeks of crisis as the IMF updated its projections of Greece's financing needs and concluded the debt situation was “unsustainable,” a senior IMF official told Reuters late on Tuesday.
That means the country's European creditors need to either write down the debt they are owed, or give Greece a grace period of as long as 30 years.
The official, who spoke on condition of anonymity, said that greater debt relief would give Greece a chance to recover and would be needed if the fund was to stay involved with any new Greek program.
IMF rules prohibit lending to a country unless public debt is considered to be on a sustainable path. Greece has missed a payment to the IMF, and would also have to clear those arrears.
“We have made it clear … we need a concrete and ambitious solution to the debt problem,“ said the official. “I don't think this is a gimmick or kicking the can down the road … If you were to give them 30 years grace you are allowing them in the meantime to bring down debt by … getting some growth back."
The report comes as Greece's leaders — who largely capitulated on its demands in the face of eurozone demands that it swallow painful austerity measures as part of any deal — attempt to sell the proposals to colleagues in Athens.
Members of Prime Minister Tsipras' own Syriza party were in open revolt Tuesday, and unions and trade associations representing civil servants, municipal workers, pharmacy owners and others called or extended strikes to coincide with Wednesday's parliament vote on the measures.
Energy Minister Panagiotis Lafazanis said lead eurozone lender Germany and its allies had acted like “financial assassins” by forcing the deal on Athens, and urged Tsipras to reject it.
“The deal is unacceptable,” Lafazanis said in a statement. “It may pass through parliament ... but the people will never accept it and will be united in their fight against it.”
In an interview on state TV, Tsipras said he would not step down, despite the open dissent within his own Cabinet and party. “I will not run away from my responsibilities,” he said.
He also criticized the deal, but said it was the best Greece could get.
“The policies imposed on us were irrational,” Tsipras said. “We faced a tough and punitive position from our partners ... But the (agreement) does offer a way out of the crisis.”
Pro-European opposition parties have pledged support for the bailout bills, but Tsipras could effectively lose his majority in parliament, weakening his ability to push through measures that he had himself vehemently opposed until a few weeks ago.
Tsipras' coalition partner, Defense Minister Panos Kammenos, also bitterly denounced the new deal.
“There was a coup. A coup in the heart of Europe,” said Kammenos, who heads the right-wing Independent Greeks party.
“They want the government to fall and replace it with one not elected by the Greek people.”
The government holds 162 seats in Greece's 300-member Parliament, and more than 30 of Syriza's own lawmakers have publicly voiced objections.
There was speculation Tsipras might choose to reshuffle his Cabinet, which would remove dissenters from key positions.
Athens was forced to accept harsh terms to remain in the euro after defaulting on its debts to the IMF and closing banks to prevent a deposit run.
It faces a deadline next Monday to repay 4.2 billion euros ($4.6 billion) to the European Central Bank. It is also in arrears on 2 billion euros to the IMF.
It will take an estimated four weeks for Greece to access the new bailout loans, leaving EU finance ministers scrambling to find ways to get Athens some of the money sooner.
The months-long standoff between Greece and its creditors has taken a heavy toll on an economy that started the year with a 2.9 percent growth forecast.
A national small business association said Tuesday that the new austerity measures were likely to cause the economy to shrink for a seventh year, with a 3.5 percent drop in output.
Despite the bleak forecasts, some Greeks appeared to take the latest turmoil in stride, saying the measures Greece will have to pass are harsh but that the alternative would have been worse.
“We aren't in a good position within the European Union under the current measures and under this present situation,” said Kostas Plafoutzis, an Athens merchant. “But under the current conditions, if we exit the EU, we will find ourselves in a considerably worse situation.”
Al Jazeera and wire services