Greek opposition socialist leader George Papandreou said on Sunday he would propose to the European Union a plan coupling fiscal consolidation and stimulus to put the ailing economy back on track if elected on Oct. 4.
Papandreou, whose party leads the outgoing conservative government by over 6 percentage points in opinion polls, said he would provide Brussels with a credible 3-year plan to rein in deficits and debt in the euro zone's weakest link.
"We are not asking for a break, we are asking for their support to a realistic plan," he told Reuters in an interview.
Greece, which narrowly escaped its first recession in 16 years this summer, has the euro zone's largest debt as a percentage of GDP after Italy and budget deficits have spiralled out of control, estimated at over 6 percent of GDP this year — well over the 3 percent EU ceiling.
"We will re-negotiate Greece's 3-year stability and growth programme with the EU," a party spokesman said, making clear Papandreou was not referring to the EU's Stability and Growth Pact, which lays out fiscal health rules for all EU members.
Papandreou, 57, said voters saw the country's potential wasted by the conservatives, whose ratings were badly hit by scandals and a slowing economy after five years in power.
"We will take immediate steps to jump start our economy," he said, adding transparency in public procurements was one of his top priorities.
"There is corruption and we are paying 30 percent more than is necessary," he said. "We will launch an online system of state procurements, it costs very little, just needs political will and has huge gains."
The son of the late Prime Minister Andreas Papandreou and a former foreign minister, Papandreou has campaigned on an anti-corruption ticket, vowing to cut public waste and raise revenues from taxing the rich while boosting salaries and public investment to pour liquidity into the economy.
He said about one third of confirmed uncollected taxes of about 31 billion euros ($45.6 billion) could end up in state coffers.
BITTER MEDICINE
Prime Minister Costas Karamnalis called snap elections half way through his term saying the economy, slowing to -0.3 percent in the second quarter from 4 percent annual growth in previous years, needed bitter medicine.
He has promised a state salary and hiring freeze.
Opinion polls show his message has not convinced voters. Papandreou's PASOK party is clearly leading and he could garner enough votes to form a government outright.
Papandreou has pledged above-inflation state sector pay hikes, saying the economy would suffer more unless the lower and middle class was given stimulus and relief, that the government's 28 billion euro support package to banks had failed to trickle down.
Public debt is expected at 103 percent of Greece's 250 billion euro economy this year. Greek bond yield spreads over German bunds hit a record high earlier this year as investors sought safer ground amid the global crisis.
"We have borrowed more than 100 billion in six years. Where has the money gone? We have an open wound of money being wasted through corruption and clientelism," Papandreou said.
He said he would not issue more debt this year unless "absolutely necessary" but would first need to see the state of public finances.
"It's not my intention to burden the country with more debt this year," he said. "We will see if it's necessary."
He would not reverse privatisations completed by the conservatives but would review agreements for any improvement to safeguard national interests, he added.
A 25 percent corporate tax would not be hiked and could actually be cut if profits are invested back in a company, he said. But investors would pay more on capital gains and dividends, which would be taxed as personal income.
"A more fair tax system will bring in more revenues," he said.
