ATHENS, Greece — Greece’s prime minister confirmed Sunday that his country is now in talks over a second bailout package “roughly equal” to the first €110 billion ($157 billion) rescue it accepted a year ago.
Prime Minister George Papandreou also blamed Greece’s bloated and inefficient state sector for bringing the country to its knees and vowed to effect deep changes with a fall referendum on the constitution that would make it easier to get rid of inept officials or workers.
His proposals were a populist response to widespread popular anger at politicians as austerity measure have cut deeply into disposable incomes. Riots erupted on the streets of Athens last week as protesters rallied against a new round of spending cuts and tax hikes demanded by international creditors.
“I ask for a vote of confidence because we are at a critical juncture... the debt and deficits are national problems that have brought Greece into a state of dependence that may have protected us from bankruptcy, but which we need to get out of,” Papandreou said, opening a three-day parliamentary debate that culminates Tuesday in a confidence vote.
He dismissed any calls for default saying this would be “a catastrophe for households and banks alike” and made it clear he would not back off from efforts to reduce Greece’s debt.
He called for an autumn referendum on “changes to the political system,” including to the country’s constitution. To do so, he said he will appoint an independent commission of up to 25 people who will collect proposals from citizens and submit a report before holding a fall referendum on proposed changed.
Papandreou said the constitutional revision will make it easier to prosecute delinquent government officials, now protected by a strict statute of limitations. He added that other changes would include a reduced number of deputies, more transparent funding of political parties and candidates and a new electoral system, possibly even with term limits.
European donors and the International Monetary Fund are requiring Greece to pass austerity measures before releasing the next €12 billion ($17 billion) loan from a €110 billion package agreed upon in May 2010 to keep Greece afloat until it can get its struggling economyback on track.
Papandreou said the original loan’s assumption that Greece would be able to borrow from the markets in 2012 is no longer valid, but insisted that was not the fault of his government. He said his Socialist government had done all it was required to, passing painful measures and reducing the deficit as a percentage of GDP by 5 percent in 2010.
Instead, he blamed ratings agencies, tax havens, “derivatives speculators” and the media for allegedly spreading panic and discouraging potential investors.