The Greek Parliament passed an austerity budget on Thursday, slashing spending and hiking taxes after five days of rancorous debate.
The measure slashes 6 billion euros ($7.9 billion) from the budget in an effort to bring Greece's deficit down to 7.4% of gross domestic product (GDP), from 15.4% in 2009.
The cuts were required as part of a bailout agreement reached with the European Union and International Monetary Fund (IMF), after the previous Greek government had doctored figured to hide Greece's spiralling deficit, which flouted requirements that eurozone governments not run deficits of more than 3% of GDP.
Prime Minister George Papandreou called it a "deep crisis" for Greece, and called for the opposition to stand by the government in the "race" to save the nation for future generations.
"I and more determined than ever to change Greece," he said. "We will not go bankrupt."
Conservative opposition leader Antonis Samaras said that the government's policies of austerity and higher taxes were strangling the Greek economy: "The way of this crisis lies in growth."
The rating agency Fitch had threatened on Tuesday night to downgrade Greece's credit rating to junk status. Its current BBB- rating is reportedly undergoing a review that is to be completed in January.
Bus and train drivers in Athens staged a 24-hour strike on Wednesday over the government's plans.