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Socialists to form new Greek government

RIA Novosti

20:55 05/10/2009 ATHENS, October 5 (RIA Novosti) - Greece's president asked George Papandreou to form a government on Monday after his Socialist party won a decisive victory over the ruling conservatives in early elections, state television reported.

The PASOK party won a majority of 160 seats in the 300-seat parliament in Sunday's election, pledging to fight corruption and tackle Greece's worst economic recession in years.

Prime Minister Costas Karamanlis's New Democracy party received 91 seats. Karamanlis said he would step down as party leader.

Greece is currently burdened with increasing unemployment rate and one of the biggest public debts in the euro zone, amounting to nearly 100% of its GDP. Its budget deficit is almost twice the euro zone maximum of 3% and continues to grow.

Karamanlis, 53, proposed an austerity program, which would include cutting budget expenses and freezing wages and pensions, as the only way to compensate for the impact of the global financial crisis on the Greek economy.

Former foreign minister Papandreou, 57, has said the economy needs a stimulus package to spur the GDP growth. Under Papandreou's plan, about 2-3 billion euro ($3-4.3 billion) would be allocated to stimulate the economy, followed by significant investment into infrastructure projects, science and education. He has also pledged a tax system reform and anti-corruption measures.

The conservatives and the communists have dismissed PASOK's program as "populist."

The new government is expected to be sworn in on Wednesday.

Russian President Dmitry Medvedev congratulated Papandreou on the election victory on Monday, expressing hope for "joint efforts to deepen Russian-Greek cooperation on a bilateral basis in many areas and in international affairs," the Kremlin said.

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