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Greek PM hints at austerity vote

Greece's prime minister has said he will consider holding a referendum on further cutbacks essential for the loan-dependent country to continue drawing on funds from an international bailout, amid persistent anti-austerity protests.

"I am prepared, for the great changes that we are putting forward, to use even the institution of a referendum, for the broadest possible consent or opinion," George Papandreou told his ministers during a marathon informal Cabinet meeting on Monday that ran for more than seven hours.

Mr Papandreou has been trying to quell dissent within his own governing Socialists as well as widespread anger among Greeks furious that a year's worth of painful cutbacks have failed to produce the expected results.

Thousands of people have been holding peaceful protests outside Parliament in Athens every night for nearly two weeks, and frustration increased as it became apparent that the government has to impose yet more spending cuts and tax hikes.

In statements delivered during the meeting and released by his office, Mr Papandreou said he had called on the Interior Minister to set up the necessary legislative conditions that would allow such a move "when it is needed". He gave no further details.

The new plans - 6.4 billion euro (£5.7bn) worth of remedial measures this year and a 22 billion euro (£19.6bn) package to 2015 - are required if Greece is to continue receiving money from last year's 110 billion euro (£98.2bn) programme of rescue loans from the International Monetary Fund and other countries that use the euro.

The government is also pushing through an ambitious 50 billion euro (£44.7bn) privatisation drive. Greece looks like it will also need more money to cover a funding gap next year and prevent the country from defaulting on its debts.

Last week, debt monitors from the EU and IMF said Greece should receive the next 12 billion euro (£10.7bn) instalment of the bailout in early July - as long as additional austerity and privatisation measures are deemed sufficient. A final decision is to be taken by the IMF board and the eurogroup in meetings later this month.

But Papandreou, whose PASOK party has a majority of six seats in the 300-member Parliament, faced a potential rebellion from within the ranks of his Socialists. Last week, 16 PASOK deputies signed a letter demanding an extensive debate on the measures before they are ratified, with one of the signatories threatening during an interview on state television not to vote for the reforms otherwise.

A formal Cabinet meeting is expected to decide on the new measures on Wednesday, and the package will then be introduced in Parliament for ratification later this month.

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