Greek austerity measures will work: Deputy PM

Talks to secure billions of euros in European Union (EU) and International Monetary Fund (IMF) aid to Athens in return for draconian budget cuts are edging towards a close, with European banks expected to contribute.

The European Commission said negotiations on the loan package should be wrapped up by Saturday, and a spokesman said euro zone finance ministers would meet to approve it on Sunday.

"The austerity measures will be efficient enough to avert a default," Pangalos told Reuters on the sidelines of the opening of the Shanghai World Expo.

Greece is preparing severe measures to cut its budget deficit by 24 billion euros (USD 31.9 billion) and unlock EU and IMF aid of up to 120 billion euros over three years. Investors hope this will stop the crisis from sinking other fragile EU economies.

But the Greek government faces a battle with unions, which have been angered by the scale of the cutbacks, and social unrest could prevent Prime Minister George Papandreou from pushing through the austerity measures.

More than half of Greeks say they will take to the streets if the government agrees to new austerity measures, according to an ALCO poll released on Friday by the newspaper Proto Thema.

Underscoring investors' jitters over the potential for public opposition to thwart the austerity programme, the euro dipped after the poll was published.

Tensions over the measures could come to a head later on Saturday, when tens of thousands of Greeks are expected to march in traditional May Day protests.

The public sector union has also called a 4-hour strike for Tuesday, on top of a nationwide strike already set for Wednesday.

However, Pangalos said he was confident the Greek "community spirit" would prevail so that the austerity measures could be effectively implemented, echoing a call for unity by Papandreou the day before.

European banks will contribute to the bailout, Germany said on Friday, something that could make it easier for EU governments to persuade sceptical taxpayers to rescue Greece from its debt crisis.