Under pressure from the European Union, International Monetary Fund and Prime Minister George Papandreou, the Greek parliament passed a tough five-year austerity budget in order to qualify for the last tranche of last year’s huge EU/IMF bailout as well as a second bailout that is being prepared.

The budget includes severe public spending cuts, higher taxes and a massive privatization scheme.

While the passage of the bill gives Greece some breathing room, lowers the risks of an immediate default and will keep the country afloat, the actual implementation of the budget may be very difficult, if not impossible.

Reportedly, 80 percent of the Greek public is vociferously opposed to the new budget and some of them have violently expressed their anger on the streets of Athens and elsewhere.

“Implementing the austerity, privatization and reform program will be a Herculean task,” said Diego Iscaro, senior economist at IHS Global Insight in London.

“Popular support for the government is diminishing, and plunging activity levels mean that the government will find it very challenging to meet its fiscal deficit reduction target for the year.”

Iscaro further warned that while today's vote will certainly give some short-term relief to markets, “concerns about the long-term feasibility of Greece's fiscal plans still remain in place.”

In order for the overall austerity program to be successful, Iscaro suggests that the Athens government will have to concurrently “introduce reforms to make the economy more competitive, but also overcome some of the deeply rooted structural problems the economy suffers such as the very high level of tax evasion.”

The Greek government’s ambitious 50-billion-euro state privatization program will form a crucial part of the austerity budget.

“Germany has made the privatization program a key test of Greek political resolve,” Iscaro said.

“Greece hasn’t raised one euro from privatizations since the first bail-out a year ago. ... If Greece is unable to meet the privatization program targets by the end of 2011, the Euro zone and IMF could withhold further release of their financing tranches in early 2012.

If such funding is indeed withheld, Iscaro warns, Athens would then have to “close its budget deficit ‘overnight’ on a cash basis which would mean many public sector employees not being paid.”

Either way, the Greek public will have to swallow some very bitter pills before the country can get back on its feet.