Greek parliament approved on Wednesday an austerity budget for 2012 that aims to shrink the country’s debt and rescue the domestic economy from deep recession, according to RIA Novosti.

The 2012 budget is designed to cut the deficit to 5.4 percent of GDP from a projected 9 percent in 2011. It will also see implementation of a bond swap deal with private lenders.

The budget plan includes a number of unpopular measures, such as tax hikes and spending cuts.

“Successful implementation of this budget will restore the country`s international credibility and create the conditions to rescue the economy,” Greece’s new Prime Minister Lucas Papademos told lawmakers.

At the end of October, eurozone leaders clinched a deal with private banks and insurers to write off 50 percent of Greece`s debt, which currently stands at over 360 billion euros or 160 percent of the country`s GDP, in exchange for a new austerity program, which Greece must implement in the next few years to get financial aid and prevent a default.