Greece must implement EU agreements, says new PM

AFP - Greece's new prime minister said Monday the main task of his interim government was to implement EU agreements on a debt rescue package, warning that the country's participation in the eurozone was at stake.

"The main task of this government as agreed by political leaders under the president is to carry out the decisions of the (October EU) summit, and to apply economic policies linked to these decisions," Lucas Papademos said.

He was speaking in his first address to parliament since taking office on Friday as head of a national unity government, opening a debate that will culminate in a vote of confidence in his role on Wednesday.

Addressing an audience that included former prime minister George Papandreou, the respected former vice-president of the European Central Bank said Greece had made progress on its dire finances but more still needed to be done.

Papademos said estimates put the deficit at "around nine percent" of gross domestic product (GDP) in 2011, down from 15.7 percent in 2009 and 10.6 percent in 2010, but warned that public debt was increasing.

"The new government of cooperation and me personally, we undertake the responsibility at this critical moment because the country's participation of the eurozone is at stake," he said.

"Our EU peers and the organisations suporting us have said that additional funding will only continue if the EU summit decisions are applied in full."

At a summit last month, eurozone leaders agreed a second EU bailout package which gives Athens 100 billion euros in loans, the same amount in debt reduction and a further 30 billion in guarantees, but only in return for painful austerity measures.

The 64-year-old, who played a crucial role in Greece's entry into the eurozone nearly a decade ago, emphasised its benefits after weeks of speculation that Greece's problems could force it out of the 17-nation currency club.

"Staying in the euro is the only choice," he said.

Papademos pledged to carry through the previous socialist government's reforms, most of whom had sparked controversy from the nation's powerful unions.

These include a new salary system for civil servants who have already sustained successive pay cuts, and a labour reserve scheme to reduce the state payroll by tens of thousands of excess staff.