Greek Prime Minister George Papandreou has vowed to stick to the austerity demands of his debt-ridden country's creditors despite mounting street protests against the measures.
"At the point where the eurozone is now ... every delay, every hesitation, every option other than strict compliance with our commitments ... is dangerous for the country and its citizens," he told a political gathering on Saturday as about 25,000 anti-austerity protesters took to the streets nearby.
"Every time we have postponed or hesitated it has cost us dearly," the premier said in his traditional post-summer break address, promising to take "all other necessary measures" to ensure the country meets its commitment to reducing the budget deficit.
Greece has already committed to slimming the public sector, liberalising the labour market and selling state enterprises.
Eurozone leaders announced a $US159 billion euro ($A150.48 billion) rescue package for the country in July but Athens is having difficulty meeting the conditions to receive its next instalment of funding, with sufficient cash in reserve for only a few weeks.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
Many Greeks fear that the state sell-off will be too cheap, and complain that about 20,000 state employees will be laid off and many others will have their wages cut amid unemployment that reached 16 per cent in June.
Clashes broke out in Greece's second city Thessaloniki, near the congress hall where Papandreou was speaking, between police and demonstrators with a banner reading: "We owe nothing, we pay nothing, we sell nothing, we fear nothing."
Papandreou faces a difficult task of calming the social climate amid German calls for more budgetary discipline and recurrent rumours that Athens will have to pull out of the eurozone because of the debt crisis.
On Saturday, he reiterated his government's commitment to speeding up privatisation and shrinking the public sector, as demanded by the European Union and the International Monetary Fund.
"We will prove wrong all those who are betting on the country to fail ... on a Greece far from the euro, those who want to buy the country for a bowl of lentils," the premier said.
On the topic of relaunching the economy, he announced a new oil and gas exploration program.
Meanwhile, anti-riot police used tear gas to push back about 3000 taxi owners among the protesters, picketing over liberalisation of their industry - one of the many reforms announced by the government to achieve savings.
The protests were organised by an "indignant" group named after a similar youth protest movement in Spain.
Members of Greece's private and public sector unions were also out in force, along with supporters of the local Heraklis football club protesting against their exclusion from the first division.
A record 7000 police were on duty to prevent an estimated 25,000 demonstrators surrounding the congress hall. They made two arrests after carrying out control checks on about 60 people.
Greece on Friday vehemently rejected rumours that it may default at the weekend, blaming them on a speculative plot against the euro.
German Chancellor Angela Merkel called on Papandreou ahead of his speech not to waver in his reform drive.
"Greece knows that credit is only available if it meets its obligations," she said in an interview to be published on Sunday in Berlin's Tagesspiegel newspaper.
At the same time she urged her compatriots to be patient with Greece, saying: "What hasn't been done in years cannot be done overnight."
German Finance Minister Wolfgang Schaeuble, however, doubted that Greece could avoid bankruptcy and was preparing for an insolvency scenario, Der Spiegel magazine reported on its website.
It said finance ministry officials were contemplating two scenarios should Greece become bankrupt: one where the country stays in the eurozone, and another where it reintroduces its former currency, the drachma.
