Greece is on course to miss the 2011-2012 deficit targets agreed with EU/IMF lenders, the Greek Finance Ministry confirmed on Sunday, as the cabinet approved the 2012 budget draft due to be tabled in the assembly on Monday for a vote later in October.
According to a press release issued by the Finance Ministry, as a cabinet meeting chaired by Greek Prime Minister George Papandreou was still continuing, the budget deficit of the debt-ridden country will reach up to 8.5 percent of GDP in 2011 instead of the 7.6 percent goal.
In 2012 the deficit is expected to be lowered to 6.8 percent of GDP instead of the 6.5 percent initial target and Greece is forecast to achieve a primary surplus of 1.5 percent.
The key to success is that 6.6 billion euros (8.83 billion U.S. dollars) worth supplementary austerity and reform measures promoted by the government in coordination with lenders will be implemented in full over the next 15 months, Greek officials stressed.
"The fundamental fiscal data of the budget draft were closely examined with the EU/IMF auditors," said the statement, adding that since there are three critical months left to 2012, the final estimate for an 8.5 percent of GDP deficit will be achieved if the Greek state mechanism and Greek citizens will respond positively.
Greek officials attributed the missed targets to deep recession which exceeded previous forecasts, reaching up to 5.5 percent this year, noting that the eurozone member country has made remarkable progress since late 2009, slashing the deficit from 15.4 percent of GDP.
On the other hand, international creditors who review Greek finances ahead of the release of the sixth tranche of a multi-billion euro bailout package to Athens this month to escape default, focus in delays in the structural reforms under way.
Beyond the 2012 budget draft the cabinet is expected to approve on Sunday a labor reserve program for up to 30,000 civil servants by end year, according to sources, in order to reduce the cost of state spending and meet all goals by 2014, under the agreement reached with EU/IMF counterparts in May 2010 to support Greece avoid a bankruptcy that could rock the European and global economy.