Greek PM calls for eurobonds to ease debt pressure

"Europe has great potential," Georges Papandreou said at a convention in Oslo for social democrats.

"Europe could leverage money. It could create eurobonds."

Speculation has mounted in recent days that Greece will need an additional 60 billion euros ($85 billion) over the next two years as it won't be able to return to financial markets next year as expected to re-finance its massive debt.

Eurozone and EU finance ministers are expected to discuss Greece at meetings on Monday and Tuesday.

Athens received a 110-billion-euro ($156-billion) bailout from the EU and International Monetary Fund last year, but a severe recession has complicated its efforts to bring its finances in order.

The eurobond proposal, which Papandreou has floated previously, would allow Greece to tap commercial debt markets at affordable rates as the bonds would be backed by all eurozone members, including stable pillars like Germany.

However Berlin has opposed eurobonds, which would increase its its borrowing costs.

Papandreou made the comments in Oslo at a convention as the European Union estimated the Greek economy would shrink by 3.5 per cent, with the government's annual deficit shooting back up to 9.5 per cent.

Greece badly needs to return to growth if it is to meet the tough conditions of its EU-IMF bailout and avoid defaulting on its 340 billion euro debt.

In a poll released Friday by the Bloomberg financial information group, 85 per cent of the 1,263 investors polled said they believed Greece would default.

Papandreou scolded the international media for complicating Greece's grind toward recovery.

"The situation obviously is not easy (but) every little detail of what is going in Greece is magnified by international media," he said.

"But of course if every day we talk about the doomsday coming, that's not going to help investment, that is not going to help consumption. That's going to be creating insecurity among the Greek people."