Greek conservative prime minister Costas Karamanlis today pledged to move faster on crucial economic reforms despite his slim parliamentary majority after a narrow election victory.
Deadly forest fires and a series of scandals eroded his party's support in Sunday's vote, complicating efforts to bring the economy into line with other euro zone countries.
"We owe it to all Greeks, whatever they voted, to move ahead quickly, with determination and take the country forward," Mr Karamanlis told reporters after receiving a mandate to form a government from President Karolos Papoulias.
Mr Karamanlis, praised by the EU for his economic record, had asked for a strong new mandate to push on with reforms such as shoring up an ailing pension system and planned privatisations.
But his New Democracy party saw its representation cut from 165 seats in 2004, when it swept to power ending 11 years of socialist rule, to 152 seats in the 300-seat parliament.
"New Democracy will face problems due to its slim majority in handling critical issues such as pensions, education and parts of the economy," said political scientist Takis Kafetzis.
The government must overhaul a pension system expected to go bust in 15 years due to an ageing population, and push through a series of privatisations and unpopular education reforms.
Mr Karamanlis is expected to keep finance minister George Alogoskoufis, whose economic record is credited with securing the election victory, and foreign minister Dora Bakoyanni in their posts, analysts said.
"Alogoskoufis has been successful in driving down the deficit and enjoys both the trust of the prime minister and of Europe," said Theodore Kouloumbis, vice-president of the Hellenic Foundation for European and Foreign Policy.
Mr Karamanlis called the election six months early, convinced his record of a reduced budget deficit, economic growth and a cut in unemployment would be enough to win.
But last month's forest fires that killed 65 people, on the back of scandals such as the sale of overpriced state bonds to pension funds, turned many voters away.