The head of Greece’s privatisation fund has been dismissed, according to officials.

Municipal workers in Athens have gone on strike in protest at government plans to reduce the number of civil servants, a measure demanded by Greece’s international creditors to approve the next instalment of bailout loans for the country.

Greece’s recession-wracked economy should start recovering from next year and its sky-high unemployment rate should edge lower from the end of 2014, the country’s finance minister said in an interview broadcast today.

Standard & Poor’s ratings agency has upgraded Greece’s credit grade by six notches – yanking the debt-heavy country out of default, but still keeping its devalued bonds in junk status.

Greece's finance ministers have said Athens faces a "very high risk of default".

Greek MPs approved the country’s 2013 austerity budget in a vital step to persuade international creditors to unblock a vital rescue loan instalment without which the country will go bankrupt.

The European Central Bank and lead lender Germany moved swiftly to shoot down a claim by Greece’s finance minister that the country had been granted a long-sought extension to meet the terms of its bailout programme.

Greece is to re-double its efforts to reach a deal with its creditors so that it obtains the loans it needs.

Greece will bring forward painful budget cuts to end a decade of primary deficits while grappling with a sixth year of recession, according to a 2013 budget draft aimed at satisfying international lenders.

Greece’s brutal recession is set to extend into a sixth year in 2013, according to forecasts in the new draft budget submitted to parliament.

Greece’s finance minister is due to submit his 2013 draft budget to Parliament today, as the government resumes negotiations with international creditors over a two-year additional austerity package.

Europe’s fragile financial calm was shattered today as investors worried that violent anti-austerity protests in Greece, and Spain’s debt troubles, showed that the continent still cannot contain its financial crisis.

Greece acknowledged yesterday it was having trouble persuading its foreign lenders to accept a plan to save nearly €12bn over the next two years, essential to unlocking the aid payments the country needs in order to avoid bankruptcy.

EU leaders appeared to be lining up behind the ECB’s expected purchase of government bonds, with even German chancellor Angela Merkel not opposed.

German chancellor Angela Merkel signalled she is willing to discuss a Greek request for more time to meet the terms of its international rescue, leaving the door open to potential concessions.

Greek Prime Minister Antonis Samaras today talked the junior partners in his fragile coalition government into dropping objections to new spending cuts demanded by the debt-crippled country’s bailout creditors, averting a crisis that could have eventually forced the country to abandon the euro.

The troika arrives back in Athens this morning with pressure mounting on the Greeks to speed up reforms as German politicians re-ignite the idea of kicking them out of the eurozone.

Greeks will be spared more austerity measures this year, parties backing the coalition government promised today, although they refused to rule out more painful cuts starting next year.

Greece’s new three-party coalition government won a late-night vote of confidence in parliament, ending a period of uncertainty that led to two elections in less than two months.

Greece’s three-party coalition government will try to get the economy out of its deep recession by encouraging investment and making privatisation its “highest priority”, finance minister Yannis Stournaras said.

In Athens, the homeless are on the streets in growing numbers, soup kitchens feed twice as many people as a year ago, and the poor are rummaging in rubbish bins in search of scrap to sell.