Greece is predicting its economy will shrink by much more than previously estimated this year.
Its economy will contract by 6.5% this year, worse than a previous estimate of 4.8% in March suggested to its bailout lenders, it said in a draft budget submitted to parliament.
Greece also said its economy will shrink for a sixth year in 2013.
About 8bn euros worth of cuts have been proposed for 2013, covering public-sector pay, pensions and welfare.
The economy will contract by 3.8% next year, the Greek government predicted.
The deeper contraction in the economy means that Greece will have to find extra money.
This may occur through further spending cuts and tax rises, or through additional money from its lenders – perhaps in the form of write-offs or postponements of what Greece already owes them.
Spending cuts are necessary if Greece is to get the next instalment of the funds from the IMF and eurozone that bailed it out – again – earlier this year. In March, when Greece agreed its latest bailout with its lenders, it predicted the economy would shrink by 4.8%.
“Confirmation of the cuts will prompt more anger here, where almost one in four Greeks are now unemployed, a record high,” said the BBC’s Mark Lowen in Athens.
“The aim is to return the country to what’s called a primary surplus, so the only deficit Greece would face would be due to the interest it’s paying on its debt. More cuts are likely to come in 2014.”
The Bank of Greece had estimated that the country’s economy would contract by about 5% this year.
The three parties in government reached a “basic agreement” on the austerity package for 2013-14 only last week – which came after 50,000 anti-austerity protesters took to the streets of Athens.
The Greek government hopes to be able to present a final package of measures to the summit of eurozone finance ministers on 8 October.
Greece received a bailout of 110bn euros in 2010 and 130bn euros earlier this year.
In recent months, concerns that Spain and Italy may need bailouts have eclipsed concerns over Greece and whether it can cut spending enough to remain in the euro.