Greece heading for May 6 ballot after PM steps down

Greece's Prime Minister Lucas Papademos resigned on Wednesday, setting the stage for early elections on May 6 after a five-month rescue mission to save the country from bankruptcy. He formally handed his resignation to President Carolos Papoulias after telling his coalition cabinet a May 6 ballot was needed to secure a new mandate for reforms to return Greece to growth and secure its place in the eurozone. "These challenges constitute a national issue of exceptional importance whose handling must be undertaken by a government with a renewed popular mandate," Papademos told ministers according to his office. "The choices we shall make (at the elections) will define the future of the country for the coming decades," Papademos later said in a televised address. He urged voters to "chose the road that ensures (the country's) place in the European Union and in the eurozone." "This government's main objectives have been met... we avoided the imminent threat of bankrupcy", he said. "The new government must continue its effort to rebuild the economy," he added. Under the constitution, the president will dissolve the current parliament and call for elections within 30 days. A new parliament is expected to be convened on May 17. Papademos, 64, a former European Central Bank vice president, was appointed as caretaker prime minister in November, heading a coalition backed by the conservative New Democracy party and the socialist Pasok party, to complete a 130 billion euro ($171 billion) debt-saving deal for Greece. The bailout was ratified by parliament last month and Athens has given private investors until April 20 to join the debt exchange. But the country, now in its fifth consecutive year of recession, must pursue structural reforms to restore growth and stay in the eurozone. Papademos is expected to stay on to supervise the electoral process, along with most of his key ministers. "Parliament is dissolved but the government is not," he told the cabinet. Among pressing issues is the recapitalisation of Greek banks that took a hit in a bond swap last month that erased nearly a third of the country's near and midterm debt, which still exceeds 350 billion euros ($461 billion). Legislation on the recapitalisation will be submitted for a vote by the incoming parliament in mid-May, a government official said. Parliament on Tuesday approved a labour bill restructuring social security funds, the final piece of legislation that Papademos's government had pledged to pass before the ballot at the behest of Greece's creditors, the EU and IMF. Most analysts have warned that the electoral campaign will be the most uncertain in decades, owing to mounting anger over two years of painful austerity that has seen the creation of several splinter parties. Private television station Mega on Monday released a poll giving the New Democracy a four-point lead over Pasok, which is narrowing the gap under its new leader, former finance minister Evangelos Venizelos. The survey by pollsters GPO suggests that with a mere 18.2 percent of the vote, New Democracy may be unable to form a majority government. Nearly one in five respondents did not give a party preference and more than three percent said they would support a neo-Nazi party, giving it enough votes to enter parliament. New Democracy leader Antonis Samaras told Mega on Monday he would not join forces with Pasok to form a government if his party failed to garner enough votes, even if this meant new elections. "If a government cannot be formed...we will have to hold fresh elections, even if the country remains without a government (until then)," the conservative leader said. "I don't trust Pasok," he added. Greece in June will attempt to chop another 11.5 billion euros ($15 billion) off spending by 2014 to meet conditions laid down under a previous EU-IMF debt rescue. Most of the 1,200 people questioned in Monday's poll said they wanted a coalition government and 56 percent took a dim view of Papademos's legacy. Elections were originally scheduled for next year.