Greece says it will impose new austerity measures in an effort to convince its international creditors that it deserves another portion of last year's bailout money to avoid a default next month.

The Athens government said Wednesday it will increase the number of civil servants receiving only 60 percent of their normal salaries, cut pensions for some retirees and trim the tax-free portion of wages for low-income workers. The government announced the cutbacks a day after the creditors funding last year's $159 billion bailout demanded another $8 billion in austerity measures, on top of earlier tax increases and spending cuts.

Greece is mired in a three-year recession and has been hard-pressed to meet the terms of the bailout. It could run out of money in October — and default on its obligations — if the International Monetary Fund, the European Union and the European Central Bank do not release an $11 billion portion of the bailout money.

Greek Finance Minister Evangelos Venizelos told Parliament that the nation has not fully grasped its economic peril, and that the national economy “could cease operating” if it fails to approve more spending reforms.

But there is rising discontent among Greeks as the government seeks to meet the demands of international financial markets to correct years of deficit spending. Greek transportation workers have called for a one-day protest strike on Thursday, and the country's two biggest labor unions have scheduled 24-hour strikes for October 5 and 19.

Meanwhile, the IMF said European banks face $410 billion in financial risks because of the broader European debt crisis. The banks hold governmental debt they purchased from financially troubled nations that might not be able to repay their loans. In addition to Greece, Ireland and Portugal have also needed to secure bailouts, while Italy and Spain have been forced to adopt sharp austerity measures to stave off the need for international assistance.

Greece's economy is projected to shrink 5.5 percent this year. With the economic contraction, tax revenues have fallen, making it more difficult for the government to meet the terms of the bailout agreement.

Venizelos issued his new warning about the country's financial peril just hours after completing a second round of debt talks with Greece's creditors on Tuesday evening. The EU reported that good progress was made, along with the agreement for inspectors to return to Greece to continue their review of economic reforms.

Despite Greece's financial woes, Venizelos vowed after the meeting with the creditors that “Greece is and will always be a member of the eurozone,” the bloc of 17 nations that uses the common euro currency.

But it is up to the inspectors to determine if Greece is meeting lenders' demands for spending cuts and a smaller government and whether it can receive the next loan installment.

Greece is deep in debt and has already slashed government spending, laid off thousands of civil servants, and imposed new taxes to close its budget deficit.

An IMF statement says Greece has made impressive progress. The IMF said Greece's European partners will stand by Athens as long as it continues to pursue sound policies. The statement said, “The ball is in Greece's court.”

Discussions about the Greek economy are to be discussed at this weekend's annual IMF meeting in Washington.