ATHENS The Greek government on Wednesday predicted worse-than-expected recession in 2013 and downgraded a rare positive note in its budget, highlighting the toll of repeated rounds of austerity.
The government more than halved its forecast for a budget surplus before debt interest payments are taken into account, dimming one of the few bright spots in a final 2013 budget bill.
Nearly bankrupt and reliant on aid from European partners and the IMF to survive, the bill showed steadily worsening economic prospects are wiping out much of the boost from spending cuts demanded by lenders.
Chaos marked the budget's release as Greece's two biggest labor unions called a 48-hour anti-austerity strike for November 6-7. The deputy finance minister cancelled a presentation due to a journalists' strike and Greek bondholders angry at losses they suffered hurled eggs at the finance ministry's budget division.
The budget showed Greece targeting a primary surplus of 0.4 percent of gross domestic product in 2013, below the previous target of 1.1 percent. That at least shows the country is on- track for a primary surplus for the first time since 2002.
Greece now expects the economy to contract 4.5 percent next year - its sixth year of recession - up from the previous forecast of 3.8 percent. Five years of recession have already shrunk the economy by a fifth and left a quarter of Greeks jobless.
Giada Giani, an analyst with Citigroup in London, said the 189.1 percent debt to GDP ratio for 2013, 10 percentage points higher than predicted in the draft budget, was a key pointer to what lies ahead.
"The pressure by the IMF on European policymakers for another round of debt restructuring, possibly including the official sector, is likely to increase," Giani said.
"The key question is how to make the Greek debt sustainable again and it seems there's no way of doing it without doing another round of restructuring."
DUMPING ICE BEFORE PARLIAMENT
The budget aims to unlock international aid by including a large chunk of spending cuts and tax measures worth 13.5 billion euros which Greece has negotiated with lenders, even though its economy is shrinking fast.
Those measures and a raft of reforms to appease EU and IMF lenders are required to secure bailout money Athens needs to avoid running out of cash next month.
Despite public anger at the unpopular spending cuts included in it, the budget is expected to pass in parliament since all three parties in the ruling coalition have agreed to back it.
In a sign of the government's fragility, it just scraped through a parliamentary vote on Wednesday on a measure demanded by lenders, aiming to scrap the need for the government to own a minimum stake in some former state companies.
A separate bill with remaining cuts and structural reforms expected in parliament next week is likely to face a tough ride after the small Democratic Left party in the fragile coalition said it would vote against labor reforms.
The party is under pressure from voters seething at the new round of austerity, which has triggered violent protests and paralyzing strikes in recent weeks.
Dozens of bondholders angry at financial losses blocked the entrance to a government office where budget numbers were being released to journalists. Tensions rose briefly when some threw eggs at the building which was guarded by riot police.
In another protest, dozens of demonstrators travelled from northern Greece and unloaded bags of ice outside parliament in a symbolic protest against rising heating oil prices.
"We are faced with a hostile government which is making it very difficult for us to survive," said Constantinos Lithokoidis, an accountant from the border town of Florina, where temperatures hit minus 28 degrees Celsius in winter.
"Many families will not be able to afford heating, many schools will not be able to open this winter. Things will be very difficult. It's very hard to think that you might not be able to keep your children warm."
(Additional reporting by Karolina Tagaris, Writing by Deepa Babington; editing by Stephen Nisbet)