In an attempt to reduce its high levels of debt, the Greek parliament is to embark on major budget cuts.
Greece, which is the euro zone’s weakest economy, has the highest debt of the 16-member bloc.
Currently, its public debt stands at €300 billion (£268 billion).
Concerns of the sheer size of Greece’s debt led international ratings agency, Standard & Poor’s, to cut Greece’s credit rating by one notch, to BBB+ from A-minus.
Prior to that, credit rating agency, Fitch, also cut Greece’s sovereign debt rating to a decade-low to BBB+ from A- with a negative outlook.
Fitch cited fiscal deterioration as the reason for the downgrade and highlighted a lack of confidence in the way the economy was managed.
Meanwhile, Greece plans to reduce the public deficit from 12.7% of output in 2009 to 9.1% next year.
Speaking after the vote for spending cuts, Prime Minister George Papandreou said the budget was “a contract to reconquer our credibility”.
“We shall prove our capacity and determination to change this country, to ourselves and to any foreigner who puts in doubt our will,” he added.
Measures to reduce debt levels include a 10% cut in social security spending, as well as a massive 90% tax on the bonuses of senior bank executives.
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