Finance minister:Greek recession worse than expected

Greek Finance Minister Evangelos Venizelos on Saturday dismissed rumours of a Greek default, but admitted that the economy was now set to shrink by more than 5 per cent this year, far more than previously estimated, according to dpa. 'The rumours circulating that Greece will default on its debt over the weekend are speculation,' Venizelos said in speech in the northern port city of Thessaloniki.At the same time, he conceded that 'the recession is exceeding all projections, even the forecasts made by the European Union, the European Central Bank and the International Monetary Fund (IMF).' 'The projections in May was that the recession would be at 3.8 per cent and now we are exceeding 5 per cent,' he said.Venizelos said the deepening of the recession was due to a huge decline in consumer spending, as well as reduced investment and exports. He said that the next two months were 'decisive for the country's existence' but that Greece remained committed to the full implementation of the terms in the July agreement for a second aid package from the EU and the IMF. 'The government must draft a credible 2011 budget, proceed with state asset sales and complete a voluntary debt swap by the end of October. 'We cannot survive as a country or emerge from this crisis without structural reforms,' the minister said, adding that 'Greece should be thankful for euro-area help.' Greece has committed to cutting its massive budget deficit from 15.4 per cent of gross domestic product to below the EU limit of 3 per cent in 2014, and achieving a primary surplus next year. The Mediterranean country is in the midst of a major financial crisis and has avoided bankruptcy only thanks to two successive international bailouts worth a total of 220 billion euros (303 billion dollars).Prime Minister George Papandreou was to attempt to muster public support for budget cuts during a nationally televised address on the economy from Thessaloniki in the evening.