The magnitude of Greece’s fiscal challenge was painted in sharp relief yesterday as Athens unveiled new budget projections exceeding the worst-case scenarios envisioned by international lenders when they agreed an €174 billion rescue eight months ago.

Instead of Greece’s debt peaking at 167 per cent of economic output next year, as predicted in the March bailout agreement, it will hit 189 per cent and climb to 192 per cent in 2014, according to projections presented to the Greek parliament.

The scale of the problem has put Germany and other euro zone creditors in a quandary, as they could be forced to come up with as much as €30 billion in new funding to meet Greece’s needs through 2016 despite strong resistance at home to any new aid.

Even under an “alternate scenario” prepared by the International Monetary Fund in March, which attempted to project a pessimistic economic and fiscal picture, Greece’s debt was only predicted to peak at 171 per cent of gross domestic product. – Copyright 2012 The Financial Times Limited