Greece will meet its nominal 2012 deficit reduction targets but faces growing strain because of the deepening recession, finance minister Yiannis Stournaras said today as pressure grew on international creditors to give Athens more time to catch up.

Forecasting that by 2014, the Greek economy would have shrunk by 25 per cent since the start of the crisis, Mr Stournaras said Athens would broadly meet a target of cutting the 2012 primary deficit, excluding debt servicing costs, to €2 billion in nominal terms.

But he said the primary deficit figure would reach 1.5 per cent of gross domestic product, compared with a previous estimate of 1 per cent, as the recession bit and he repeated a plea for more time from the European Union and International Monetary Fund troika.

"Otherwise, there is a great risk of prolonging the negative consequences for the economy and society," he told a conference in Athens.

Speaking in Beijing, Charles Dallara, the chief negotiator representing Greece's private sector creditors, said Athens should get cheaper rates on its €130 billion aid deal and at least two more years from the EU and IMF to meet its targets.

But better terms could only come after the government of conservative prime minister Antonis Samaras delivers on his commitments to fiscal reform, Dallara, managing director of the Institute of International Finance (IIF), told reporters.

"Once that has been done, and I am confident it will be done, Europe and the IMF should move quickly to extend the adjustment period for at least two years and provide the modest additional financial support for that extension to be effective," he said.

He said responses to the Greek debt crisis placed too much emphasis on short-term austerity and not enough on improving the country's longer-term competitiveness.

Reuters