Greek PM: If Greece cannot borrow at normal rates, result will be ‘worse than catastrophic’

Greek PM: Greece needs to borrow at normal rates

ATHENS, Greece — Greece must be able to borrow money on terms similar to those given other European Union countries or the results will be “something worse than catastrophic,” Prime Minister George Papandreou declared Tuesday.

Greece has been facing a severe financial crisis that has hiked up the price at which it can borrow money, because international markets are worried about whether the country can pay back its debts.

“We are borrowing from international markets that simply do not believe us,” Papandreou told his Socialist party deputies in Parliament.

Greece saw its credibility plummet after Papandreou’s newly elected government in October sharply revised its deficit to 12.7 percent of annual economic output — over four times the EU limit and up from an initial estimate of under 4 percent of GDP.

While the government has already announced an austerity plan, the prime minister said further measures needed to be taken. The comments come a day after the EU’s finance chief, Olli Rehn, told Athens it must impose more painful, permanent spending cuts soon if it is to emerge from the crisis.

“We must take decisions today, not tomorrow. Yes, we must take further measures,” Papandreou said, adding that Greeks will face painful sacrifices, but that the country was in a “fight for national survival.”

“The government is forced to ask for a contribution from all Greek citizens and for public servants to get by with less,” he said.