George Papandreou, the Greek prime minister, has offered to step down to facilitate the formation of a unity government to pass austerity measures, state TV reported.
His offer on Wednesday came hours after protesters angry over sweeping spending cuts clashed with riot police in the capital Athens.
Papandreou said the new unity government must support the EU and IMF bailout, and should not seek to overhaul it.
“Prime minister Papandreou talked with Antonis Samaras [head of the conservative opposition] today and proposed that if the two agreed on a framework of specific commitments for changes in the country and the political system and specific targets, he would be willing to stand down from his office,” a government source told the Reuters news agency.
The opposition conservatives responded to the premier’s offer by stating that a unity government was only possible if Papandreou resigned and if the bailout was renegotiated.
The day’s political developments came as the government debated fresh austerity measures that would extend beyond its term in office amid violence on the streets of capital.
Protesters rallied outside parliament chanting “thieves, traitors” and asked “where did the money go?” as they demonstrated amid a 24-hour national strike organised by major labour unions which saw hospitals, transport and other public services crippled.
Small groups of youths threw stones and petrol bombs at police cordons, and smashed the windows of a luxury hotel on Syntagma square, outside the parliament building.
Police responded to the violence with tear gas.
“I feel rage and disgust,” Maria Georgila, a 45-year old public sector workers and mother of two, told the Reuters news agency.
“These are very tough measures and they won’t get us out of the crisis. I can’t believe they have no alternative.”
Alan Fisher, Al Jazeera’s correspondent in Athens, said: “There is undoubtedly anger on the streets … we’ve also seen people wearing entirely black, putting on masks and goggles.”
According to police, 20,000 people turned out for the demonstration, organised by two major unions, although local media put the figure at 40,000.
Another 20,000 people demonstrated in Greece’s second city of Thessaloniki, authorities said.
Greece has to pass a 2012-2015 austerity programme worth $40.5bn by June-end or face being cut off from rescue funding by European countries and the International Monetary Fund (IMF).
The measures including a five-year campaign of tax hikes, spending cuts ans sell-offs of state property.
However some politicians in the governing party have publically criticised the new cuts, with one of them defecting on Tuesday, reducing Papandreou’s parliamentary majority to five.
With its credit rating deep in junk status, Greece is being kept afloat by a $159bn EU-IMF rescue loan program and will need additional support to cover financing gaps next year.
To meet its commitments, Papandreou’s Socialists abandoned a pledge not to impose new taxes and drew up a four-year privatisation programme worth $72bn. This has fuelled ongoing protests against austerity by public utility employees and other affected groups.
US-based financial services company, Standard & Poor’s, slashed Greece’s rating to CCC on Monday, dropping it to the lowest of 131 states that have a sovereign debt rating.
This indicates that Greece’s creditors may have less chance than Pakistan, Ecuador or Jamaica of getting their money back.
This is a surprising low for Greece as the country still had a stellar A-rating despite a hefty debt burden in January 2009.
This article was originally published on aljazeera.net.