New Greek Prime Minister Lucas Papademos said yesterday he is determined to keep the country in the eurozone, but acknowledged it is set to miss its deficit reduction target this year.
Mr Papademos was sworn in last week to head a 15-week coalition government supported by the outgoing Socialists and rival conservatives. It was created to secure the approval of a new massive bailout deal worth 130 billion euros from other eurozone countries and the International Monetary Fund.
A vote of confidence in Mr Papademos’ new government will take place in Parliament tomorrow.
Presenting an outline of his policies, Mr Papademos told MPs that for his government, Greece’s euro membership is “our only choice”.
He spoke hours after conservative leader Antonis Samaras defied a European Union demand to provide a written commitment to the new debt agreement – or else see rescue loans frozen.
“I take office during the most difficult moment in the country’s recent history. The country can be saved – it’s up to us,” Mr Papademos said. “I think it is obvious for those who support this government to undertake the commitment and ensure that our country’s euro membership is not endangered.”
Papademos said the country’s budget deficit is set to reach nine per cent of gross domestic product this year, higher than earlier targets.
He promised faster implementation of structural reforms – including liberalising market rules and making Greece’s giant public sector more efficient. He declared that Greece has already met requirements to receive the next eight billion euro rescue loan instalment, vital to avoid bankruptcy. But he warned coalition parties that signing a commitment to back the new debt deal is now required for that vital payout.
“Our first priority is to immediately fulfil the preconditions for the disbursement of the (next) instalment.
This disbursement must be done by December 15 at the latest, given our funding needs,” Mr Papademos said. “Our eurozone partners have made it clear: The choice is between staying in or getting out of the eurozone.”
Greece is currently surviving on loans from a €110 billion rescue package agreed in 2010, when huge borrowing costs blocked the debt-crippled country from international markets.
But that package later proved inadequate, forcing the new bailout agreed on October 26 that will also see the reduction of the country’s privately held debt by some 50 per cent.