Greece will pay its debts, will not default: PM

March 20, 2010 1:08 PM EDT

Greece has taken the necessary steps to tackle its fiscal crisis and will not default on its debt obligations, the country's prime minister said on Saturday in a speech to his socialist party's national council.

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Greece is pressing for a concrete standby package from its European Union partners to help bring its borrowing costs down. The overborrowed country currently pays almost twice as much as Germany to refinance its debt.

European Union leaders are set to discuss a support mechanism for Greece when they meet in Brussels on March 25-26. Greece has said it may have to turn to the IMF if a European solution is not found to help it manage its debt mountain.

"Let everyone be certain, Greece will not default, we will not let it default. Greece has a strong government and courageous people. We are returning to the road of economic stability," Papandreou said.

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Papandreou has called for action to curb speculation that he claims has driven yield spreads on Greek government bonds over core European benchmarks at record highs, adding to fiscal strains.

"We are building alliances in and outside the EU. We are convincing our partners for changes to set limits to speculators. We are not asking anyone to pay our debts. We will do this by ourselves," he said.

"We want to be able to implement all that we have announced and enacted calmly."

Greece, with a debt-to-GDP ratio seen hitting 120 percent this year, faces a hump in debt refinancing in April and May as about 20 billion euros of previous issues and coupons come due.

(Reporting by George Georgiopoulos; editing by John Stonestreet)