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Originally published Tuesday, September 18, 2012 at 5:04 AM

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Greece: recession will have shrunk economy 25 pct

Greece's economy will have contracted by 25 percent by the time the recession ends, the finance minister said Tuesday, as the government remained locked in talks with rescue lenders for its next major austerity program.

The Associated Press

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ATHENS, Greece —

Greece's economy will have contracted by 25 percent by the time the recession ends, the finance minister said Tuesday, as the government remained locked in talks with rescue lenders for its next major austerity program.

Yannis Stournaras made the remarks at a Greek-Chinese business forum, before senior officials from his ministry resumed negotiations with inspectors from the European Union, European Central Bank and International Monetary Fund, known as the "troika."

"The cumulative reduction (of gross domestic product) since 2008 is just under 20 percent and is expected to reach 25 percent by 2014," Stournaras said.

Unpaid government bills and other debts to the private sector have reached (EURO)6.5 billion ($8.51 billion), he said.

The troika is demanding the government reduce its budget deficit by more than (EURO)11.5 billion ($15.1 billion) over two years as a condition for continued emergency loan payments.

Earlier Tuesday, Greece raised (EURO)1.3 billion ($1.7 billion) in a treasury bill auction, with the rate for the 13-week loans easing slightly to 4.31 percent.

The government's Public Debt Management Agency said the sale of (EURO)1 billion in debt was oversubscribed 1.98 times, and the additional (EURO)300 million was raised in non-competitive bids.

The interest rate eased from 4.43 percent set at a T-Bill auction last month.

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