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Eleni Chrepa and Natalie Weeks, On Thursday September 22, 2011, 5:53 am EDT
Greece said it will accelerate budget cuts to keep emergency loans flowing, extending austerity measures that have deepened a recession and failed to ease doubts that it can avoid default.

Subway, tram, train, bus and trolley workers and state- school teachers are holding a 24-hour strike in Athens today to oppose cuts in pensions and workers’ pay. Flights to and from the Athens International Airport will be disrupted as air- traffic controllers walk out for three hours.

The latest round of cuts targeting civil servants’ wages and pensioners were demanded by international lenders to ensure Greece reach deficit-reduction targets in a 110 billion-euro ($151 billion) bailout and receive a payment due next month.

The cuts will enable Prime Minister George Papandreou to address his biggest deficit, the “credibility deficit,” Jens Bastian, the Alpha Bank Fellow for Southeast Europe at St. Antony’s College at the University of Oxford, said in a Bloomberg Television interview today. Meeting international targets and reducing civil-service costs are “a matter of national urgency,” he said.

Finance Minister Evangelos Venizelos heads to Washington tomorrow to attend the annual meetings of the International Monetary Fund where he will hold talks with IMF Managing Director Christine Lagarde.

Without the infusion of emergency loans, “the risk is that the system, the financial sector and the real economy stop functioning,” Venizelos told Parliament in Athens before Papandreou convened his inner Cabinet yesterday to complete the cuts.