- Associated Press - Tuesday, June 21, 2011

ATHENS  (AP) — Greece‘s embattled prime minister faced a crucial confidence vote in Parliament on Tuesday over the new Cabinet he formed to help pass the unpopular austerity measures needed to avoid a national default.

If Prime Minister George Papandreou’s new government fails to get the necessary parliamentary support in a midnight vote Tuesday, it would throw into question whether it can pass a new austerity bill by the end of the month, as demanded by international creditors.

Expectations that Mr. Papandreou would win lifted world markets. His Socialist party holds a five-seat majority in the 300-member legislature, and a simple majority is needed to pass.

“Indications over the last 24 hours or so have certainly been that the government will survive, if only because the alternative would be so dire,” said Beat Siegenthaler, an analyst at UBS.

Mr. Papandreou reshuffled his Cabinet last week and replaced his finance minister to ease growing dissent within the governing party.

On Tuesday the new finance minister, Evangelos Venizelos, promised that Parliament will pass the unpopular austerity package by the end of June in order to comply with European Union demands in order to receive the next payment in its bailout loan.

Mr. Venizelos said Parliament is set to vote on 28 billion euros ($40.2 billion) worth of budget cuts and other savings next week.

Greece has said it will face a default unless it receives the 12 billion euro ($17.3 billion) rescue loan installment from European countries and the International Monetary Fund.

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