Greek PM says country must stay in eurozone

New Greek Prime Minister Lucas Papademos says he is determined to keep the country in the eurozone, but acknowledged it is set to miss its deficit reduction target this year.

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$178 billion from other eurozone countries and the International Monetary Fund.

A vote of confidence in Papademos' new government will take place in parliament Wednesday.

Presenting an outline of his policies, Papademos told lawmakers 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 agreementor else see rescue loans frozen.

"I take office during the most difficult moment in the country's recent history... The country can be savedit's up to us," 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."

Budget deficit grows

Papademos said the country's budget deficit is set to reach 9 per cent of gross domestic product this year, higher than earlier targets.

He promised faster implementation of structural reforms including liberalizing market rules and making Greece's giant public sector more efficient. He declared that Greece has already met requirements to receive the next$11 billion rescue loan installment, 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) installment... This disbursement must be done by Dec. 15 at the latest, given our funding needs," 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 $150 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 Oct. 26 that will also see the reduction of the country's privately held debt by some50 per cent.

Athens is expected to officially launch talks in the next few days with banks and other private bond holders for the debt writedown provided under the new deal.