Greece is desperate to restore investor confidence in its economic statistics, and reassure buyers of its debt, after revealing that the previous government understated its budget deficit by half.
The European Union is also pressing Greece for radical measures to curtail its deficit to prevent damage to the common currency, the euro.
Everything that was revealed after the elections proved that New Democracy (the previous, conservative administration) fled from its responsibilities, Papandreou said. History confirmed our worst fears.
The damage is incalculable. It is not only financial or fiscal but also affects the position of the state ...
Our duty today is to forget about the political cost and think only about the survival of our country. Past policies make it necessary to proceed to brutal changes and reduce accumulated privileges, he added.
Greek government officials say the EU inspectors, visiting Athens with IMF experts, have delivered a grim assessment of the nation's economy.
Their message was that Athens will miss its targets for reducing the deficit without spending cuts of the kind that have already brought Greeks out on to the streets.
Investors, who must decide whether to buy more Greek debt when Athens issues a new 10-year bond in the next few weeks, are anxious and Moody's agency said it could downgrade Greece's credit rating if Greece fails to meet its budget promises.
There is only one dilemma: Will we let the country go bankrupt or will we react? Will we let the speculators strangle us, or will we take our fate in our own hands? Papandreou said.
We must do whatever we can now to address the immediate dangers today. Tomorrow it will be too late, and the consequences will be much more dire, he added.
Papandreou insisted that Greece would not seek a bailout from abroad: We ask the EU for its solidarity and they ask us to meet our obligations. We will meet our obligations ... We will demand European community solidarity and I believe we will get it.
No other country will pay for our debts, he said. It is a matter of honor and pride for our country to put our own house in order.
(Reporting by the Athens bureau; Writing by Kevin Liffey)