Greek Prime Minister Costas Karamanlis on Tuesday promised tough economic measures to deal with Greece's ballooning debt, saying he was confident voters would opt for his difficult path in Oct. 4 elections.
Karamanlis, whose New Democracy party has been trailing the opposition socialists in opinion polls, told Reuters in an interview he will speed up reforms and promote transparency if re-elected for a third term on Sunday.
"Greece is at a crucial crossroads," he said. "At this moment the country needs a responsible, steady and clear policy. We face serious problems."
Karamanlis called snap polls halfway through his second term, asking for a fresh mandate to deal with the economic crisis hitting the euro zone's weakest link. The last polls published showed him trailing by about 6 percentage points.
He said he was confident he could beat the odds by rallying New Democracy supporters, whom pollsters see as ambivalent just days before the vote, but ruled out cooperating with the far-right to achieve a governing majority.
AUSTERITY MESSAGE
Contrary to his socialist challenger, George Papandreou, who has promised a stimulus package including taxing the rich and supporting the poor, Karamanlis launched his campaign with a tough austerity message — a public wages and hiring freeze.
He said his policy hinged on curtailing public spending, effectively battling tax evasion and speeding up structural reforms, including privatisations.
"I am telling Greek citizens very clearly that we have two difficult years ahead of us," he said.
Karamanlis said the global crisis has not hit Greece as hard as other EU countries but the huge debt, estimated at 103 percent of GDP in 2009 and second only to Italy's, made fiscal measures imperative to bring the economy back on a growth path.
After years of annual 4 percent growth, Greece will have zero or slightly negative growth this year, he said.
The budget deficit will be around 6 percent this year if revenue-boosting measures announced by his government in June are implemented and would be brought under the 3 percent EU ceiling before 2011, he added.
"We must prove first of all to ourselves and secondly to our partners that we are tidying up public finances and that we are achieving the target within the next two years," he said.
He said fiscal consolidation was also important for Greece's credibility in markets. The yield spread between Greek bonds and German bunds hit record highs early in the year as investors left the euro zone's periphery for safer ground.
Karamanlis said Greece would not borrow more this year, as it had frontloaded its debt issuance, largely covering its needs early.
"All the Cassandras here and abroad, who said Greece would have a problem financing its debt, have been disproved. Greece borrowed normally and smoothly," he said.
Karamanlis swept to power in 2004 on a strong anti-corruption ticket but a series of scandals have hit his government and hurt its popularity and Greece has dropped a few notches on the Transparency International watchdog's index.
He said that if re-elected he would take a series of measures concerning the accumulation of wealth by politicians to cement transparency.
"The talk of scandals has not only hurt our party but Greece's political life as a whole," he said. "It is true that we must do more as a country to institutionally cement transparency."
Asked what he would have done differently during his five years in power, he said: "I would have moved much faster and more boldly on reforms."
