Police fired teargas at dozens of youths hurling stones in central Athens this afternoon as a strike against austerity brought much of Greece to a halt during talks on the next phase of a bailout package.
Senior EU and IMF inspectors met finance minister George Papaconstantinou at the start of a visit to Athens to press Greece to shore up its finances one year into the EU-IMF deal.
Police clashed with the youths in black hoods just metres from where the meetings were taking place to determine whether Greece will get a fifth aid tranche from the €110 billion bailout that saved it from bankruptcy last year.
Without the next €12 billion tranche, key to paying €13.7 billion of immediate funding needs, Greece would effectively default.
The IMF and EU officials will also consider giving Athens improved loan terms or more aid to avoid restructuring its huge debt. Investors say a restructuring, imposing losses on private bondholders, is inevitable without more funds.
Euro zone officials including German chancellor Angela Merkel say they will wait for the result of the inspection visit before taking any decisions.
Police said about 20,000 protesters marched to parliament to mark a nationwide 24-hour strike against wage cuts and tax hikes which unions say are strangling the economy, a smaller number than previous protests.
Athens was nearly deserted with many shops and public services closed and posters reading: "We can't take it any more. The rich and the tax evaders should pay."
Greek debt prices have stabilised, but markets are braced for some form of restructuring in the long run as Greece labours with a €327 billion debt mountain.
Ten-year Greek bonds were changing hands at around 55 per cent of their face value, carrying a secondary market yield of 15.696 per cent - little changed on the day, but up more than 3 per cent since the start of the year.
The Socialist government has cut salaries and pensions and increased taxes, despite repeated strikes, to meet bailout targets but the measures have plunged the country into a deep recession and crimped tax revenues, hampering efforts to tackle a debt of nearly 150 per cent of GDP.
The nationwide strike grounded flights and halted shipping. Hospitals were operating on skeleton staff, schools were closed and city transport was disrupted. Only emergency flights were allowed between 9am and 1pm.
Greek newspapers reported today that Greece was nearing agreement for supplementary EU-IMF loans of €50 to €60 billion to cover its funding gap in 2012 and 2013 in exchange for bold privatisations.
But a euro zone source in Brussels said Greece needed to show credible progress on meeting agreed targets for fiscal consolidation and privatisation of state assets before further emergency funding could be considered.
Ministers are now conceding that Greece cannot regain investor trust to go back to the markets for finance in 2012 and analysts say the government faces difficult choices.
Reuters