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UPDATE 1-Greece in no need of euro aid- finmin

Published 03/20/2009, 05:41 AM
Updated 03/20/2009, 06:00 AM

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ATHENS, Mar 20 (Reuters) - Greece does not need any euro zone rescue package to help it from going bankrupt, the finance ministry said on Friday.

"As we have stated repeatedly, Greece has absolutely no such problem (need of euro rescue)," a ministry spokesman said.

A senior German lawmaker told Reuters earlier on Friday euro zone countries had agreed a rescue plan for members in a dire financial situation. He said Ireland and Greece were the worst off in the bloc.

Greece, the euro zone's most indebted member after Italy as a percentage of GDP, is struggling to contain its fiscal shortfall as its economy slows sharply after years of 4 percent growth, hurting government revenues.

Athens is projecting a budget deficit of 3.7 percent this year. The EU Commission expects Greece's economy, about 2.5 percent of the euro zone, to grow by only 0.2 percent in 2009, hit by the global downturn.

Faced with increasing budget strains, the government said earlier in the week it will slap a one-off tax on those earning more than 60,000 euros a year and froze public sector wages.

Greece, which suffered a downgrade to A- by ratings agency Standard & Poor's in January, will borrow about 43.7 billion euros this year. Moody's, which cut its outlook to stable from positive, has said debt servicing will be a tougher burden than in the past.

The yiels spread of 10-year Greek government debt over Bunds was at 265 basis points on Friday. Greece projects its public debt will rise to 96.3 percent of GDP this year from 94.6 percent in 2008. (Reporting by Lefteris Papadimas) (Writing by George Georgiopoulos; editing by Chris Pizzey)

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