Greek prime minister details radical plan to stop country drowning in debt

THE GREEK Prime Minister George Papandreou yesterday said the country was in danger of drowning in debt and pledged to take radical action to tackle its fiscal situation.

“We need to move immediately to a new social deal,” Papandreou said in an economic policy speech aiming to reassure markets and EU partners. “We must change or sink,” he said.

Greece’s government has come under pressure from its EU partners and rating agencies to take drastic measures to cut a deficit that has reached nearly 13 per cent of GDP this year.

Public debt is expected to reach 121 per cent of GDP in 2010. Fitch last week downgraded Greece to a BBB+ rating for the first time in a decade amid mounting concern the country would default on its debt, and Standard & Poor’s warned of a possible downgrade.

Papandreou said the new government would have to make tough decisions that would be painful for the country. He pledged to introduce structural reforms that would get the deficit down to within European limits by 2013.