Greece averted the immediate threat of an uncontrolled default on Thursday when it successfully concluded a bond swap deal under which private sector creditors agreed to accept deep cuts in the value of their holdings.

"There is now more than just recession, budget cuts and tax increases ... there's the hope to turn the wheel of growth," he told a party conference.

In a sharp reminder of the deep unpopularity of the austerity measures he has overseen, a pensioner on crutches hurled yoghurt at the burly Venizelos just before his speech, forcing him to delay his appearance to change clothes.

Venizelos, the dominant figure in the party since his appointment to the finance portfolio by former Prime Minister George Papandreou last year, is expected to win PASOK's leadership comfortably in an internal vote on March 18.

However opinion polls show the Socialists far behind the conservative New Democracy party ahead of elections expected by mid-May at the latest.

Both PASOK and New Democracy are in the coalition government headed by former central banker Lucas Papademos but have been openly jockeying for position in the runup to the elections, which may not produce a clear winner.

Formed in November, Papademos' emergency coalition government had a narrow mandate to complete bailout and debt cut talks and then hold elections as soon as possible.

A government official said Greeks may go to the polls as early as the end of April once the final details of the bond restructuring are in place.

The so-called Private Sector Involvement (PSI) is a key component of the 130 billion-euro ($170.55 billion) rescue package agreed last month with the European Union and International Monetary Fund and is expected to be approved following Thursday's bond swap.

Once the debt swap operation is finally completed on April 12, when a smaller tranche of bonds worth at least 20 billion euros will be exchanged, Greece can go ahead with new elections, an official said.

"I imagine it (the elections) will be somewhere then," government spokesman Pantelis Kapsis told Skai television when asked if the polls would take place on April 29 or on one of the following Sundays.

OBLIGATIONS

Whoever wins the poll, Greece will have to stick to the reforms it has promised, German Finance Minister Wolfgang Schaeuble warned.

"Greece must stick to its obligations after the election. That's the basis for the (bailout) program," he said in an interview with Greek newspaper To Vima.

Austerity measures associated with the policies have plunged the Greek economy into its longest and deepest slump since World War Two and there is no clear sign of a return to the kind of growth that could help cut its crippling debt pile.

Underlining the dire state of an economy in which unemployment is running at 21 percent with one in two young people out of work, data on Friday showed gross domestic product shrank by a record 7 percent in 2011. Investment slumped by 21 percent after a 15 percent slide in 2010.

Central bank governor George Provopoulos said this week's bond restructuring would allow Greece to begin the long journey towards regaining the trust of investors.

"This is a new opportunity ... to gradually restore confidence in the economy's prospects," he was quoted as saying in financial newspaper Imerisia.

As the government struggles to stabilize the economy, a senior official said there were hopes of getting 1 billion euros in financing from the European Investment Bank (EIB) this year as a stimulus to encourage investment.

Greece and the European Commission are pushing the EIB, the European Union's long-term investment arm, to disburse the funds, said Gikas Hardouvelis, top economic adviser to Papademos.

"The faster we do it, the better. The economy is sinking and everyone is too scared (to invest)," Hardouvelis told Mega television

(Additional reporting by Michael Shields in Vienna; editing by Andrew Roche)

• A Permanent Economic Emergency