Greek Prime Minister George Papandreou on Friday said the country's finances were in a "state of emergency" and that a ballooning budget deficit required urgent reforms and state cost cuts."We are in a state of emergency and everybody must realize that," Papandreou told parliament in an inaugural address after his socialist Pasok party won elections on Oct. 4.
"The situation of our economy is explosive ... we face a derailment of public finances without precedent," he said.
Pledging to restore Greece's ailing economy with a stimulus package, the socialists this month found their worst fears confirmed upon coming to power.
The previous conservative administration had insisted that the deficit stood at six percent of output - still double the level allowed by the European Union - but the Bank of Greece says the real gap is closer to 10 percent.
Greece is also on the brink of recession after years of around four-percent growth. Its public debt, one of the highest in the euro currency area, is set to exceed 100 percent of gross domestic product this year.
Papandreou on Friday said negotiations with the EU to resolve the issue would be tough because Greece "bears a great burden of unreliability."
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