Papandreou says he will stay the course

Prime Minister George Papandreou said on Thursday that he would continue to lead his beleaguered government and extract Greece from the current financial crisis, dousing speculation of early general elections, and confirmed that he would reshuffle his Cabinet before seeking a vote of confidence in Parliament.

?You can rely on me and I will support the national effort to extract Greece from the crisis,? Papandreou told Parliament.

The announcement came just hours after two defections by Socialist party MPs threw the ruling party into turmoil and fueled speculation of more resignations.

The developments also came just one day after Papandreou failed in a fourth attempt to secure political consensus to push through a second set of austerity measures required to secure more international aid.

Papandreou said he would press on with efforts to garner consensus, both within his party and with his political opponents.

?Now is not the time to give up,? he said. ?Now is the time to continue, now is the time to say yes to important change.?

Papandreou said that the Cabinet reshuffle would revitalize his administration, which he admitted was guilty of «mistakes and shortfalls.? He said the reshuffle would give his administration the strength to push through a new rash of painful reforms. «The next government will be more effective and more cohesive,» he said.

The premier said he understood the frustration of Greeks who are angry with his government?s austerity drive. «I understand the pain and even the anger of the people,» he said, noting however that anger and self-pity would not save the country from default.

Papandreou acknowledged that the new austerity measures being proposed by his government were «tough and in some cases even unfair» but still unavoidable.

?The sooner we implement them, the sooner we emerge from the crisis,» he said. «We don’t have the luxury of running away from this problem.”

Papandreou criticized international rating agencies for a series of downgrades of Greece’s creditworthiness and said that European officials had also made mistakes in recent months in tackling a broadening and deepening debt crisis.

The premier said he would propose the idea of holding a referendum to reform the Greek constitution — a move that would allow authorities to cut jobs in the public sector which are currently protected by the Constitution. The public sector employs around 800,000 people.

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