GREECE WILL ANNOUNCE new austerity measures aiming to meet deficit reduction targets and allay fears among investors about their creditworthiness.

The measures are expected to include cuts to benefits and plans for privatisation as the country looks to save €23 billion in order to lower its budget deficit from 10 per cent to 1 per cent of gross domestic product (GDP) by 2015, BBC reports.

Investors were asking for a record 13 per cent return on government bonds on Thursday which sparked fears in the market about Greece’s ability to repay its debt and partly prompted the downgrading of Ireland’s credit rating.

Greece received at €110 billion bailout from the EU and IMF last year after it emerged it under reported the size of its budget deficit that was over 15 per cent of GDP in 2009.

But in order to qualify for the support it has to raise €50 billion by 2015, an outlook many see as optimistic.

Bloomberg reports that the Greek government is still aiming for a deficit of 7.4 per cent of GDP this year but that first-quarter revenue missed the target by €1.4 billion.

Finance Minister George Papaconstantinou is also expected to unveil plans to raise €15 billion by 2013 through the sale of state assets alongside spending cuts that are unlikely to be popular amongst the Greek population.

In February, a national general strike prompted scenes of violence as police fired tear gas in attempts to disperse protesters on the streets of Athens who were demonstrating against previously announced austerity measures.

Read: Irish government to announce revised terms of EU/IMF bailout >