The government will unveil a draft budget draft later on Monday, aiming to satisfy international lenders but expected to prolong the economic pain of the Greek people.

It will include more cuts in public sector pay, pensions and welfare benefits as part of an 11.5 billion euro ($14.8 billion)austerity package of savings that will be spread out over the next two years.

Greece's economic output has declined by a quarter since 2008 in a vicious spiral of austerity and recession, with the most heavily indebted euro zone nation repeatedly falling behind in meeting targets set under its EU/IMF bailouts and at risk of being forced out of the single currency area.

The official, who spoke to Reuters on condition of anonymity, said Athens will frontload a big chunk of the new spending cuts under negotiation with inspectors from the troika of the European Union, European Central Bank and International Monetary Fund.

"The draft budget will include 7.8 billion euros in cuts for 2013," the official said.

Belt-tightening has taken a toll on economic activity, suppressing domestic demand and driving the jobless rate to a record 24.4 percent.

The official said the budget will aim for a primary surplus of 1.1 percent of gross domestic product (GDP). He said GDP was expected to contract by 3.8 to 4 percent next year.

This year's primary deficit - which excludes debt servicing costs - is expected to exceed a targeted 1.0 percent of GDP. The finance ministry sees the primary deficit at 1.5 percent of national output in 2012.

(Reporting by Lefteris Papadimas; Writing by Karolina Tagaris; Editing by Paul Taylor)

• A Permanent Economic Emergency