Greek PM confirms snap election on Sept. 16

ATHENS, Aug 17 (Reuters) Greek Prime Minister Costas Karamanlis confirmed today the country will hold early elections on Sept. 16, aiming to win a fresh mandate to push forward economic and social reforms.

''I have handed over a letter (to the president) asking for the dissolution of parliament and the call for elections on September 16,'' Karamanlis said in a public address after meeting President Karolos Papoulias.

Karamanlis, who called the elections six months before his conservative government's first term ends, said he needed a new mandate for a series of reforms, including constitutional changes, that would further spur economic growth.

''This needs a fresh and strong popular mandate,'' he said. ''We need to continue with change and reforms on the basis of fiscal stability and move ahead with greater speed and a new dynamism.'' ''This is why I believe the time for elections has come,'' Karamanlis said.

Recent opinion polls show Karamanlis's centre-right New Democracy party leading the socialists by only one or two percentage points, leaving the election result wide open.

At stake is the pace of economic and social reforms needed for Greece to catch up with its euro zone partners.

The government has won praise from the European Union for turning the economy around, cutting deficits and pushing ahead with reform and privatisation.

But it has faced increasing protests at home over unpopular economic belt-tightening measures, slow social reforms and a series of political and economic scandals.

Karamanlis, whose election in 2004 ended 11 years of socialist rule, said the drafting of next year's budget needed to be carried out by a government that had won the renewed ''trust of voters''.

''Drafting the new budget, a budget of development, a budget of responsibility and social solidarity, is a national matter,'' he said.

Karamanlis said the new government would need a strong parliamentary majority to continue with reforms.

But changes in electoral law mean it is likely the new parliament will include five parties instead of the traditional four, chipping away at the winner's majority.

Socialist opposition leader George Papandreou, whose party is in favour of a model that couples pro-business policies with a solid welfare state, sounded confident.

''I am certain of victory,'' he told reporters outside his party headquarters today. He was due to make a statement later in the day.

Analysts have said a small parliamentary majority for the winning party could affect the speed of reforms.

''What could cause problems regarding reforms would be a marginal majority for the winning party,'' said fund manager Vassilis Antoniadis at Marfin Global Asset Management.

''However, snap elections are good as this pending issue that was hanging over the market will disappear.'' REUTERS ARB RAI1850