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Debt-ridden Greece 'turning corner'

Drastic action to fight Greece's debt crisis is beginning to take hold, the country's prime minister said.

After accumulating massive public debt and overspending, Greece avoided a default last month through the first instalment of a £90 billion rescue package from its 15 eurozone partners and the International Monetary Fund.

"Today is the first time when I can look to the future with more optimism," prime minister George Papandreou told members of the Institute for International Finance in Vienna, Austria.

"We have taken difficult decisions, tough but necessary decisions, and we are now witnessing the first signs that we are turning the corner."

In the first five months of the year, the deficit was down 40% compared to the same period in 2009, he told the global association of bankers. While revenues were up, expenditures had been severely curtailed, he added.

"We are still on the very start of our three-year economic programme yet we are very far from our initial point eight months ago," he said, adding his goal was a "complete reorientation" of the Greek economy.

Mr Papandreou also pledged to repay emergency financing from abroad. "This - let me stress again - is no free money," he said. "It is loans to be paid back with substantial interest and it is a package to support change in Greece - not to return to negative practices."

Addressing recent social and at times violent unrest over harsh austerity measures, Mr Papandreou said Greeks wanted a turnaround.

"Yes, these are painful changes, and no-one denies the difficulties for our people," he said. "We are a proud people. We want to see change."

Scrutiny by analysts, sensationalist journalists and others was undermining Greece's efforts to restore confidence in its economy, he claimed.

"We are asking for the necessary respect and calm so that we can do our work under the best of conditions - when our citizens are not terrorised every single day with rumours about losing their money and returning to the drachma (currency) or being expelled from the European Union," Mr Papandreou said. "This is obviously nonsense."

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