BERLIN (Reuters) – Greece’s austerity programme is sustainable only if investment and economic growth in the country can be stimulated, Prime Minister George Papandreou was quoted on Monday as saying.

Papandreou told Handelsblatt newspaper that he believed Athens could implement its programme of reforms and major budget savings, although the government also had to ensure that the weakest members of society were protected.

Papandreou also said that he had written a letter to U.S. President Barack Obama jointly with German Chancellor Angela Merkel, French President Nicolas Sarkozy and Eurogroup chairman Jean-Claude Juncker on whether the market in credit default swaps should be closed.

Papandreou acknowledged that the government’s austerity programme, demanded as a condition for a bailout by the EU and IMF, would cause a deep recession in Greece.

“This savings programme was the only way to avert the threat of a state bankruptcy,” he said. But he added: “The programme can be sustainable only if we stimulate investment and growth.”

Nevertheless he said the programme, which has brought Greeks onto the streets in sometimes violent protests, was achievable. “I believe we can implement our programme. But we must ensure that the weakest in our society don’t fall into the abyss.”

Papandreou criticised financial markets for overreacting to Greek’s debt crisis and accused speculators of helping to provoke panic reactions.

“Angela Merkel, Nicolas Sarkozy, Jean-Claude Juncker and I have suggested in a joint letter to Barack Obama whether the markets for credit default swaps … should not be closed. The G20 countries want to discuss this,” he said.

(Editing by Jason Webb)