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ATHENS -(Dow Jones)- Greek Prime Minister George Papandreou said Thursday that the country is on the right path and that his government is determined to push through a tough reform agenda.
Last month the debt-laden Mediterranean nation agreed to impose strict fiscal austerity policies and a ground-breaking reform agenda in exchange for a EUR110 billion bailout from the European Union and International Monetary Fund.
Speaking at a televised press conference in Brussels after a European leaders summit, Papandreou said "Greece is on a path to succeed in its difficult targets, and while that requires sacrifices, we are on the right path and determined to systematically pursue reforms. The joint IMF-EU support package has given us the sufficient time that the markets did not provide."
Greece has agreed to ambitiously slash its deficit to below 3% of gross domestic product within three to four years from a euro-zone record high of 13.6% of GDP in 2009.
The prime minister admitted that his government had no choice but to impose the harsh reforms because there was no other alternative than to submit to its lenders' demands.
"Had we not taken these measures and agreed to the bailout, we would not have had money to pay pensions, public servants, and finance the social security and health system. The measures I admit are painful but today we would be in a worse position so they are absolutely necessary."
On Thursday a visiting delegation from the IMF and EU broadly approved of the progress that Greece has made on fiscal consolidation, and discussions are ongoing on other policy requirements that have been mandated by the binding memorandum for the assistance package.
The socialist party leader admitted that in many situations, like pension system reform and labor-market liberalization, they were trying to temper the austerity and reforms with constructive policy choices advancing socially sensitive solutions based on dialogue.
But his political opponents criticize him for a failure to focus on growth, and workers unions are calling for more paralyzing general strikes against proposed amendments to liberalize labor law and curtail pension entitlements.
According to recent opinion polls, the country's voters seem evenly split about accepting the necessity of reforms and those that flat-out reject them.
Meanwhile, on wider global issues, Papandreou said that it was insufficient for European economies to just focus on reducing bloated deficits, but the new investments were needed and Europe should lead the way in innovation and Green technology.
Moreover, EU countries, Papandreou said, would need additional tax revenues to finance infrastructure, research and education. He underlined that the leaders discussed Europe putting forward new ideas to the next G-20 meeting in Toronto for a tax on banks and financial transactions, a CO2 tax, Green bonds and Eurobonds.
"A 'Tobin tax' on financial transactions of 0.05% if introduced worldwide would raise EUR2 billion a year for Europe and more regulation is also needed to make financial markets less opaque, more transparent and to prevent rampant and damaging speculation," Papandreou said.
"The path is still difficult and there is much do in Greece, but at least I am glad my country is regaining the trust of the European family, and that we are no longer the focus of every meeting," the Prime Minister added.
Copyright 2009 Dow Jones Newswires
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