As the Greek parliament prepares to discuss fresh austerity initiatives as a result of the multi-billion dollar bailout package by the EU and the IMF, protesters flood to the capital Athens and marched outside the parliamentary building to block MPs from entering the hall. This has prompted the police into firing teargas to the protesters in which the angry masses responded by throwing yoghurt and stones.

Greece’s Prime Minister George Papandreou is pushing for the approval of the new round austerity measures amounting to €28 billion ($40.5 billion) in government spending cuts. If this proposal gets the nod of parliament, it will begin to take effect by 2012 and will end in 2015.

The austerity program is currently a priority bill by Papandreou’s Socialist-led government given that Greece’s international lenders are giving it until the end of June to pass new spending cuts laws or else run the risk of losing financial aid. Just recently, leading credit agency Standard & Poor’s downgraded the country’s credit rating to CCC from the previous B despite previous actions by Athens to improve its fiscal standing.

The downgrade just made Greece the worst among the 131 countries S&P monitors for credit worthiness. The state is practically living from borrowed money and is only kept afloat by the $159 billion EU-IMF bailout package.

Ever since Greece was given the lifeline by its creditors, it has embarked on various initiatives to boost the government’s source of funding. Aside from the deep spending cuts, the government has also pushed for higher taxes and privatization of state-owned assets.

Because of a series of unpopular policies, Papandreou’s own party is starting to see some defections within its ranks. Some members of the administration party have expressed their dismay on the latest spending cuts as well as Papandreou’s abandonment of his previous promise not to raise taxes.

The mass general strike has crippled many state-run services such as hospitals and public transport as employees of these companies participated in a walkout along with other protesters that come from the many labor union groups who joined the rally. Sensing that the protesters will make a blockade in the parliamentary building where the debates will take place, the police have shut down many parts of the city and placed a metal barricade in front of the building.

Meanwhile, the EU’s finance ministers did not reach an agreement regarding the principles involved in the private creditors’ contribution to the planned second round of Greek bailout. As a result of their failure to arrive at a consensus, more pressure is exerted on the cost of insuring Greece’s debt from a possible default.

If the Greek government’s proposals will push through, the government will earn an additional €6.5 billion ($9.4 billion) coming from tax hikes and spending cuts for 2011. Papandreou has also drawn up plans for a huge-scale privatization program worth $72 billion in four years.

The Papandreou government is already under immense pressure from the EU and IMF demanding that the government pay back €12 billion next month when some of their loans will have already matured.