PM says Greece is now ‘turning the corner’

Greece is “turning the corner” as steps taken to fight its debt crisis start paying dividends, the Greek Prime Minister George Papandreou said on Friday.

“Today is the first time when I can look to the future with more optimism,” George Papandreou told members of the Institute for International Finance (IIF) in Vienna.

“We have taken difficult decisions, tough but necessary decisions, and we are now witnessing the first signs that we are turning the corner.”

After accumulating massive public debt and overspending, Greece avoided a default last month through the first instalment of a 110 billion euro ($131bn) rescue package from its 15 euro currency partners and the International Monetary Fund.

But in the first five months of this year, the deficit was down 40 per cent compared with the same period in 2009, he told the global association of bankers.

While revenues were up, expenditures had been severely curtailed, he added.

Papandreou said his government made a conscious decision against default and against leaving the euro, a decision that made “good economic sense” and repeated a pledge that the country would pay its dues.

“We will honour our contracts with the financial community and yes, we will pay our debts,” Papandreou told the IIF lobby group of some 400 of the world’s top financial institutions.

“I do not care if this is my only term as prime minister - I have done what I thought was necessary to save Greece from disaster.”

The audience gave the Greek Prime Minister a standing ovation.

Addressing recent, sometimes violent, protests at home over tough austerity measures, Papandreou said Greeks wanted a turnaround.

“Yes, these are painful changes, and no one denies the difficulties for our people,” Papandreou said. “We are a proud people. We want to see change.”

He said scrutiny by ill-informed analysts, sensationalist journalists and others was undermining Greece’s efforts to restore confidence in its economy.

“We are asking for the necessary respect and calm so that we can do our work under the best of conditions: when our citizens are not terrorised every single day with rumours about losing their money and returning to the drachma [currency] or being expelled from the European Union,” Papandreou said. “This is obviously nonsense.”