Finance Minister Yannis Stournaras met with his deputy ministers and Labor Minister Yannis Vroutsis to hammer out the measures for 2013 and 2014, ahead of a series of top-level meetings between Prime Minister Antonis Samaras and top European officials later this week.
The Finance Ministry hopes to have the "general directions" of the cuts finalized in time for a visit to Athens Wednesday by Luxembourg Prime Minister Jean-Claude Juncker, who chairs the eurozone finance ministers' meetings. Samaras then heads to Berlin and Paris on Friday and Saturday for talks with German Chancellor Angela Merkel and French President Francois Hollande.
The proposed measures will also be scrutinized by Greece's debt inspectors from the International Monetary Fund, European Commission and European Central Bank, known as the troika, which is due to return to Athens in September.
At the head of a fragile three-party coalition government, formed after two elections in May and June, Samaras and his finance chief have a delicate balancing act to pull off in deciding on how to make the spending cuts.
The prime minister managed to persuade his coalition partners to drop their objections to the cuts, which are expected to include further reductions to salaries and pensions. Socialist party leader Evangelos Venizelos, himself a finance minister until a few months ago, said earlier in August he had backed down from demands to delay some of the cuts to avoid bringing down the new government. He insists the new measures must not be "unfair" and "across the board."
Greece has been depending on two multibillion-euro international bailouts from other eurozone countries and the International Monetary Fund since its debt crisis came broke in 2010. But despite taking a series of harsh austerity measures that saw salaries and pensions slashed and repeated rounds of tax hikes, the results have fallen short of what had been agreed between European and Greek officials hoped for.
The country has fallen behind on implementing reforms and austerity measures demanded in exchange for the rescue funds, fueling impatience in Germany - the largest single contributor to the bailouts - and other eurozone countries and speculation that Greece will have to leave the euro, the currency used by 17 European nations.
Greece's debt stands at more than 300 billion euro, and the economy is struggling through a fifth year of recession with unemployment at above 23 percent.
The coalition government has said it hopes to renegotiate parts of the bailout conditions, mainly seeking an extension in the two-year austerity deadline.
Germany has long said Greece should get no more leeway and must stick to its pledges.
"I have always said that we can help the Greeks, but we cannot responsibly throw money into a bottomless pit," Finance Minister Wolfgang Schaeuble said Saturday.
Juncker argued over the weekend that Greece will not leave the eurozone, saying in an interview with an Austrian newspaper published Saturday that such an event would carry unforeseeable risks and would not be politically feasible.
"In the case of a total refusal by Greece regarding budget consolidation and structural reforms, one would have to deal with the question," he said, according to the report. "But because I assume that Greece will try to redouble its efforts and achieve the targets that have been set, there is no reason to assume that this exit scenario can become relevant."
Germany's vice chancellor, Economy Minister Philipp Roesler, who takes a hard line on Greece, said recently that the idea of the country leaving the euro had "lost its horror."
Athens insists the country must remain in the euro - something which repeated opinion polls have shown the vast majority of Greeks want.